Monday, October 16, 2017

Teck Resources Ltd

Sound bite for Twitter and StockTwits is: Dividend paying material stock. I would think that this stock price is relative cheap at this point. However this stock has had a lot of ups and down in price and it may be more at a median price. It is a materials stock so it is risky. See my spreadsheet on Teck Resources Ltd.

I do not own this stock of Teck Resources Ltd. (TSX-TECK.B, NYSE-TECK). The time to buy this stock is when it cuts its dividend. For example, 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.

Dividends on this stock have swung wildly. They have been suspended as in 2009 and have also been increased by 200% as in 2011. Lately they have been on their way down again with a decrease in 77.8% in 2015, but then they are up some 50% in 2017. However, the dividend to be paid in September 2017 is 50% of that paid in June 2017. They are certainly not dividends you can count on. Every time they cut or suspend the dividend the share price crashes. Then it pops right back up when dividends are restarted or increased.

The company had a good year in 2016 and is expected to have an even better year in 2017. The second quarterly report seems to support this. For example the EPS was $1.78 in 2016 up by 141% from a loss of $4.29 in 2015. For 2014 is expected to up another162% to $4.66. The 12 month EPS to the end of the second quarter is $3.55. It seems well on its way to a good 2017 in EPS.

This company has very good debt ratios. The Liquidity Ratio for 2016 is 2.16 and the 5 year median is 2.67. The Debt Ratio is 3.64 with a 5 year median of 2.08. Leverage and Debt/Equity Ratios are 1.38 and 0.38 with 5 year median of 1.92 and 0.92. Good debt ratios can get a company though the bad times. These are good ratios for a material type stock to have as this business does have its ups and downs.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.76, 17.78 and 22.80. The 10 year corresponding ratios are 7.89, 13.19 and 19.68. The historical ratios are 9.52, 13.19 and 19.68. The current P/E Ratio is 6.15 based on 2017 EPS estimate of $4.66 and a stock price of $28.66. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham price of $57.90. The 10 year low, median and high median Price/Graham Price Ratio is 0.56, 0.91 and 1.26. The current P/GP Ratio is 0.49 based on a stock price of $28.66. This stock price testing suggests that the stock price is relatively cheap.

The 10 year Price/Book Value per Share Ratio is 1.03. The current P/B Ratio is 0.90 based on a stock price of $28.66, Book Value of $18,476M and BVPS of $31.98. The current P/B Ratio is some 13% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. Also note that a stock is considered cheap if it is selling below the book value; that is with a P/B Ratio of less than 1.00

The historical dividend yield is 1.58%. The current dividend yield is 0.52% a value some 67% lower. The current dividend yield is based on dividends of $0.15 and a stock price of $28.66. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that the dividends varied a lot over time. They have declined by some 30% per year over the past 5 years. This may not be a good test for this stock at this time.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The consensus is a Buy. The 12 month stock price consensus is $34.57. This implies a total return of 21.14% with 20.62% from capital gains and 0.52% from dividends based on a current price of $28.66.

The 10 year median Price/Sales (Revenue) Ratio is 1.89. The current P/S Ratio is 1.40 a values some 26% lower. The current P/S Ratio is based on Revenue estimate for 2017 of $11,386M, Revenue per Share of $20.48 and a stock price of $28.66. This stock price testing suggests that the stock price is relatively cheap.

Jason Phillips on Motley Fool likes this stock. The Canadian Press has an article on CBC News about Teck being fined for polluting a B.C. Waterway. Edgar Ambartsoumian on Seeking Alpha does an analysis of this stock. He talks about using it as an option play. See what analysts are saying about this stock on Stock Chase. They have mixed views.

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 Resources Ltd.

The last stock I wrote about was about was HNZ Group Inc. (TSX-HNZ, OTC- CDHPF)... learn more. The next stock I will write about will be Logistec Corp (TSX- LGT.B, OTC-LTKBF)... learn more on Wednesday, October 18, 2017 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 - Peter Hodson... learn more on Thursday, October 17, 2017 around 5 pm.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.


  1. I am wondering what you think of John Heinzl's dividend hog portfolio which he recently published in the Globe and Mail. What do you think of some of his stock selections?
    Thanks. I really enjoy your blog.

  2. Actually I do not have access to the Globe and Mail so I do not know what his selections are.

    1. Here are the selections, number of shares and the price on the day he purchased them with an imaginary $100,000.
      AQN-T 400 13.19
      AW.UN-T 100 32.97
      BCE-T 70 58.46
      BIP-UN-T 100 53.82
      BMO-T 50 94.43 94.43
      CAR.UN-T 120 33.73
      CM-T 40 109.17
      CPX-T 160 24.67
      CT REIT* CRT.UN-T 250 13.89
      CU-T 100 38.75
      iShares Core Dividend Growth ETF*
      DGRO-N 125 32.47
      EMA-T 100 47.26
      ENB-T 100 52.12
      FTS-T 100 44.78
      MFC-T 180 25.31
      PZA-T 200 16.56
      Canadian REIT* REF.UN-T100 46.13
      RY-T 50 96.54
      Telus T-T 100 44.88
      TD-T 70 70.25
      TRP-T 80 61.67
      XIU-T 275 23.15

    2. It is a pretty normal sort of list. The only one generally that has not been recommended is CPX because it has not been listed long.