1 Canadian Mining Stock to Buy and Hold Forever

Here’s one of the best Canadian mining stocks you can hold for years to come to benefit from its surging production capacity and strengthening financial position.

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The metal and mining stocks have outperformed the TSX Composite Index by a wide margin so far in 2024, thanks to a strong rally in metals prices across the board. As the long-term demand outlook for metals remains positive, investors looking to benefit from the sector might consider adding some Canadian mining stocks to their portfolios, which could offer long-term value and sustainable growth.

One such top mining stock is Teck Resources (TSX:TECK.B), one of the largest diversified mining companies in Canada and the world. It currently has a market cap of $36.3 billion, and its stock trades at $70.54 per share, with solid 26% year-to-date gains. In this article, I’ll highlight why Teck Resources stands out as one of the best Canadian mining stocks worth holding for the long term.

Most mining companies across the globe have faced operational challenges in the last few years due to the global pandemic and other macroeconomic woes. Nonetheless, Teck’s long-term financial growth trends remain a stock. In the five years between 2018 and 2023, the company’s total annual revenue rose 19% from $12.6 billion to $15 billion. To add optimism, its adjusted annual earnings in these five years jumped 27% from $4.07 per share in 2018 to $5.15 per share in 2023. These strong financial growth figures could be the reason why Teck stock has yielded a solid 141% positive returns in the last three years.

In the first quarter of 2024, Teck Resources registered a 5.4% YoY (year-over-year) increase in its total revenue to $4 billion. Although the company’s adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) fell around 14% YoY to $1.7 billion due mainly to lower zinc prices and reduced steelmaking coal sales volumes, it exceeded Street analysts’ expectations. On the positive side, factors such as favourable pricing in the steelmaking coal and copper markets contributed positively to its EBITDA last quarter.

Continued focus on long-term growth drivers

Teck’s one of the most notable accomplishments in the latest quarter was the completion of all major construction at the QB (Quebrada Blanca) operation. This included the ship loader and molybdenum plant, with the first shipment of concentrate already dispatched from the newly completed port facility. This milestone marked a very important step in Teck’s long-term strategy to ramp up copper production. Interestingly, with the help of improved QB production, the company managed to post a solid 74% YoY increase in its copper production in the March 2024 quarter.

Despite the ongoing production ramp up efforts, Teck continues to maintain a strong financial position, minimizing its risks. In April 2024, its liquidity stood at $7.1 billion, including $1.6 billion in cash.

Foolish takeaway

Clearly, the recent completion of QB construction and successful first vessel loading could help Teck Resources boost its production capacity and accelerate its financial growth trends in the coming quarters, which should help its share prices continue soaring. While the company remains focused on more projects to fuel long-term growth, it still makes sure to give its investors incentives through share repurchases and dividends.

Notably, in the first quarter alone, Teck returned $145 million to shareholders through $80 million in share repurchases and $65 million in dividends. I expect its dividends to grow further as its financial position strengthens and production scales up, making it an increasingly attractive Canadian mining stock to buy now and hold for years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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