Tuesday, January 25, 2011

Teck Resources Ltd 2

I have followed this stock (TSX-TCK.B) for sometime. I was looking at it in November 2008 and I thought that the price was getting rather silly. So I bought 100 shares and sold then when the price picked up in May 2009. I made just over $1,200. This was lots of fun. For a little amount of money, I got to play the market.

When I look at the Insider Trading report, I find there is some $36.9M of insider selling and about $24,000 of Insider Buying. The buying occurred last June when the stock price was just below $35. Most of the selling has occurred during the recent rise in the price of this stock. And, everyone is selling, including CEO, CFO, Officers and Directors. Considering this company has a worth of $36B, the selling is a very small percentage of the company’s total worth.

A good thing to say about this company is that they restarted the dividend payments in 2010 and then proceeded to raise the dividend 50%. The dividends are not back, to where they were, but this is a good start and shows that the company has faith in near future earnings. The other thing to mention is that the number of shares increased in 2008 by 10% to purchase Fording Coal. They were again raised by 21% in 2009 to raise some cash.

Is the current price of its stock good? I get a price of $59.60. First, the stock recently made an all time high at $61.79 and has since then fall back a bit. When I look at the Price/Earnings Ratio, I find it has been rather low on this stock. The 5 year median low is just 5 and the 5 year median high is 14. The 5 year median price is just 8. A P/E of 10 or below is considered a low P/E. The current P/E is 11 and this is close, but under the 5 year high.

I get a Graham Price of $57.44. The current stock price is just 3.8% above this. The average difference between the Graham Price and the stock price is 9.7%. So, by this measure, the stock price is not bad. I get a Price/Book Value Ratio of 2.30 and a 10 year average P/B Ratio of 1.61. By this measure, the current ratio is 40% above the 10 year average and so points to a high price. The last thing to look at is the dividend yield. The current dividend yield is just 1%. The 5 year average is higher at 2.3%. So, by this measure, the stock price is also high.

When I look at analysts recommendations, I find lots of Strong Buy, Buy and Hold recommendations. I also find 1 sell recommendation. The consensus would be a Buy. (See my site for information on analyst ratings.) A contrarian might look at all the Strong Buy and Buy recommendations and think this might not be a good time to buy, as a consensus opinion is often wrong.

Analysts that give a hold recommendation mostly mention the recent run up in stock price. They feel that it should pull back some more to be at a good price. Some feel it will pull back some more because of profit taking (it did recently make an all time high). Even analysts that give this a Strong Buy recommendation say that the risk is high on this stock (it is mining after all). A lot of analysts feel it is a high quality Canadian mining company that will do well in the long term.

If you want to buy a high quality Canadian mining company, this would certainly be a good one to have. There is an entry on Wikipedia for this company, see Teck Resources.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

No comments:

Post a Comment