Teck Resources Ltd 2

On my other blog is some comment on "Cash Flow Importance". See comments blog.

I do not own this stock of Teck Resources Ltd. (TSX-TCK.B). I follow a few resource stocks, but generally do not own much. TSX is heavy with resource stocks, so I just like to know what is going on with them.

When I look at insider trading, I find $1.3M of insider selling. As there is also insider buying, the net insider selling is just below $0.4M. There are lots of outstanding options and option like things. Insiders not only have Options, but Deferred Share Units and Restricted Share Units. Everyone, with the exception of a few directors, have lots more options and option like things than shares.

Insider and some companies own the Class A shares, which has 100 votes per share compared to the 1 vote per share of Class B shares. Caisse de dépôt et placement du Québec has almost 17% of Class A shares. Sumitomo Metal Mining Co. Ltd. has about 16% of Class A shares and Temagami Mining Company has about 46% of Class A shares.

There are some 463 institutions that hold 37% of the outstanding shares and they have marginally increased their shares over the past 3 months (0.1%). Basically there is no change in what they are holding.

I have 5 year low, median and high Price/Earnings Ratios of 6.38, 11.72 and 14.28. The 10 year median Price/Earnings Ratios are not far off this. The current P/E Ratio 8.92 on a stock price of $30.28 shows a rather reasonable stock price.

I get a Graham Price of $49.01. The 10 year low, median and high Price/Graham Price Ratios 0.68, 0.97 and 1.26. The current P/GP is 0.63. This shows that the current stock price of $30.28 is very good.

The 10 year median Price/Book Value Ratio is 1.85. The current P/B Ratio is 0.99. Not only is the current price below the Book Value, the P/B Ratio it is only 46% of the 10 year median.

For the dividend yield I am comparing the current one to the 10 year median dividend yield. This is because we had one recent year of no dividends. The 10 year median dividend yield is 1.44%. The current yield is some 80% lower than then the 10 year median. It is also lower than the 10 year high dividend yield of 2.03%. This shows a very good current relative price.

All the test show that the stock price is relatively very good. However, this is not a dividend growth stock and dividends can fluctuate. Over the past 10 years, dividends only made up about 3% per year of the total return per year or 14% of the total return. I think you would buy this stock to get capital gains, not dividends.

When I look at analysts' recommendations I find Strong Buy, Buy, Hold and Underperform. However, the overwhelming recommendation is Strong Buy and this is the consensus recommendations. One Strong Buy analyst said that this company should be a core investment in the Canadian base metals sector.

Consensus 12 month Stock price is $49.30. This implies a total return of 34% with only 2.6% from dividends. So what this really is a capital gains play. We are in a long term secular bear market, so if you make a capital gains play, it is should be a short term investment.

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.