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What Does Teck Resources Limited’s (TSX:TECKB) Share Price Indicate?

Today we’re going to take a look at the well-established Teck Resources Limited (TSX:TECK.B). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the TSX. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at TECK.B’s outlook and value based on the most recent financial data to see if the opportunity still exists. See our latest analysis for TECK.B

What’s the opportunity in TECK.B?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that TECK.B’s ratio of 7x is trading slightly below its industry peers’ ratio of 11.6x, which means if you buy TECK.B today, you’d be paying a reasonable price for it. And if you believe TECK.B should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that TECK.B’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from TECK.B?

TSX:TECK.B Future Profit Dec 11th 17
TSX:TECK.B Future Profit Dec 11th 17

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at TECK.B future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for TECK.B, at least in the near future.

What this means for you:

Are you a shareholder? Currently, TECK.B appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on TECK.B, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on TECK.B for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TECK.B should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Teck Resources. You can find everything you need to know about TECK.B in the latest infographic research report. If you are no longer interested in Teck Resources, you can use our free platform to see my list of over 50 other stocks with a high growth potential.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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