When it comes to growth stocks, it can be hard to find a stable buy. A company that provides stable growth, dividends, and even more in its outlook. But that’s exactly what we’re looking at today. This dividend stock continues to surge towards all-time highs, with shares still up 45% from 52-week lows.
With that in mind, let’s take a look at why Teck Resources (TSX: TECK.B) is still an interesting buy, even as it nears those 52-week highs.
Earnings up
Teck stock is a diversified natural resources company with significant operations in copper, steelmaking coal, and zinc. The company’s stock has recently been trading near all-time highs, prompting investors to question whether it remains a good buy at these higher levels.
Still, Teck stock reported its latest quarterly earnings in April 2024, showcasing strong financial performance driven by robust demand and high prices for its core commodities. The company reported earnings of $1.56 per share, beating analysts’ expectations. This performance was underpinned by record revenues of $3.2 billion, representing a significant year-over-year increase. Teck’s copper production, in particular, saw a substantial boost due to higher prices and increased output from key mines.
What’s more, the share price of Teck Resources has reflected this strong performance, climbing steadily throughout the first half of 2024. Year to date, the stock has gained approximately 25%, significantly outperforming the broader market and the commodities sector index. This rise has brought Teck’s stock to all-time-week highs, sparking discussions about the sustainability of such valuations.
Looking ahead
The outlook for Teck Resources appears favourable, albeit with some cautionary notes. The global demand for copper is expected to remain strong, driven by the ongoing transition to renewable energy and electric vehicles, both of which are copper-intensive. Analysts project a continued tight supply-demand balance in the copper market, which bodes well for Teck’s revenue prospects.
In its steelmaking coal segment, Teck benefits from its position as one of the world’s leading producers. While coal markets are more volatile and subject to regulatory pressures related to environmental concerns, Teck’s high-quality metallurgical coal is essential for steel production, which remains critical to infrastructure and construction projects worldwide.
Furthermore, Teck stock’s zinc operations stand to gain from rising industrial activity and infrastructure spending, particularly in emerging markets. Zinc is a key material in galvanizing steel and in various industrial applications, supporting steady demand growth.
Bottom line
With shares up 45% and a dividend yield of 0.72%, there are enough reasons certainly to consider Teck stock. Teck Resources’s recent earnings performance and share price surge reflect strong operational execution and favourable market conditions for its key commodities. The outlook for copper and zinc remains robust, driven by structural demand trends in renewable energy and infrastructure.
However, the volatility of commodity markets and regulatory risks, particularly related to coal, warrant careful consideration. Yet, at current levels near all-time highs, potential investors should weigh the company’s solid fundamentals and growth prospects against the inherent risks in the commodity sector.
For long-term investors with a high-risk tolerance and a positive view on commodities, Teck stock could still represent a compelling buy. Meanwhile, those wary of market volatility and regulatory pressures might consider waiting for a more attractive entry point.
