On my other blog I am today writing about Payday Loans Companies...continue...
I do not own this stock Teck Resources Ltd (TSX-TCK.B, NYSE-TCK), but I have in the past. In 2008, I wanted to cover some resource stocks and this is one that I decided to take a look at. I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.
When I look at insider trading, I find $2.4M of insider selling and this is all by officers, and 2.3M of net insider selling. There is little insider buying and all the buying is by directors. The CEO has shares worth $8.4M and has options worth $48.1M. The CFO has shares worth $0.2M and has options worth $14M. An officer has shares worth $0.1M and has options worth $4.5M. A director has shares worth $0.6M and has options worth $0.8M. This is just to give you an idea on insider share ownership and option values.
Norman Bell Keevil, Caisse de dépôt et placement du Québec, Sumitomo Metal Mining Co. Ltd. and Temagami Mining Company own around 85% of Class A shares and control the company. They also have considerable investments in this company with Norman Bell Keevil's investment worth around $23M, Caisse de dépôt et placement du Québec's worth around 294M, Sumitomo Metal Mining Co. Ltd.'s worth around 49M and Temagami Mining Company's worth around $144M.
The 5 year low, median and high median Price/Earnings Ratios are 6.38, 14.66 and 19.68. The current P/E Ratio is 17.08 based on a stock price of $27.84 and 2013 earnings estimates of 1.63. This suggests that the stock price is towards to high end of the reasonable range.
I get a Graham price of $34.06. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.97 and 1.26. The current P/BP Ratio is 0.82. This stock price tests suggest that the stock price is reasonable. A P/GP Ratio of 1.00 or less also suggests that the stock price is a good one.
The 10 year median Price/Book Value per Share Ratio is 1.85. The current P/B Ratio is 0.88 based on a stock price of $27.84. This current P/B Ratio is some 52% of the 10 year median P/B Ratio. This test suggests that the stock price is cheap. Also, on an absolute basis a P/B Ratio below 1.00 says that the stock price is cheap.
The 5 year median dividend yield is 2.29% (if you exclude the dividend yields for 2009 and 2010. The current dividend yield at 3.23% is some 41% higher. This test says that the stock price is cheap.
The analysts' recommendations are Strong Buy, Buy Hold and Underperform. Most of the recommendations fall into the Buy and Hold categories. The consensus recommendation would be a Buy. The 12 month stock price consensus is $31.50. This implies a 12 month total return of 16.38%, with 3.23% from dividends and 13.15% from capital gains.
The Motley Fool has a good review on this stock. It talks about how the company handled the problems that the purchase of Fording Canadian Coal Trust caused. Over all it is a positive view of this company. The Motley Fool also gave a buy rating on this stock in August 2013. The blogger Dividend Ninja talks about why he bought this stock in August 2013.
However, Zacks research felt that in August 2013 the company was in the overbought territory. On the NASDAQ site Minyanville thinks that on a technical note you should hold off buying this stock.
I think that my stock price tests basically say that this stock is currently selling at a very good price. This is a rather risky and volatile stock as it is in mining (S&P/TSX materials Index). See my spreadsheet at tck.htm.
This is the second of two parts. The first part was posted on Tuesday, September 10, 2013 and is available here.
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.
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 or StockTwits.
Post a Comment