Investing in mining stocks with a modest amount like $200 can feel like a small step into the big leagues of the stock market. However, even this small investment has the potential to grow substantially if you pick the right stock. To maximize your chances of success, it’s essential to focus on mining stocks with a solid financial foundation, exposure to in-demand commodities, strong management, and a clear growth strategy. One company that ticks many of these boxes is Teck Resources (TSX:TECK.B).
Recent performance
Teck Resources is a heavyweight in the mining industry. It is based in Canada and specializes in the production of base metals like copper and zinc. One reason Teck is particularly compelling right now is its strategic pivot away from steelmaking coal. Earlier this year, Teck sold its Elk Valley Resources coal business to Glencore, earning a hefty $7.3 billion in cash proceeds. This move wasn’t just about offloading a legacy asset. but a calculated step to refocus the company entirely on energy transition metals like copper. These are in high demand thanks to the rapid adoption of electric vehicles (EVs) and renewable energy systems.
Recent financial results highlight Teck’s resilience and adaptability in a volatile market. In the third quarter of 2024, Teck delivered robust earnings, including a $1.7 billion adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Largely fuelled by its copper operations. The Quebrada Blanca (QB2) copper mine in Chile, one of Teck’s flagship assets, has ramped up production significantly. This mine alone is expected to account for a substantial portion of the mining stock’s future copper output, helping Teck to solidify its position as a global leader in copper production.
Teck’s performance also shines when looking at key metrics like revenue growth and profitability. Over the trailing 12 months, Teck achieved a 43.7% year-over-year increase in revenue, bringing the total to $16.66 billion. This growth was bolstered by its strategic focus on high-margin assets and disciplined cost management. The mining stock’s operating margin stands at 13.86%, demonstrating its ability to generate strong returns even in a competitive industry.
Still stable
In terms of financial stability, Teck has a healthy balance sheet, with $7.23 billion in cash as of the most recent quarter and a current ratio of 2.92, thus indicating its ability to meet short-term obligations with ease. This liquidity provides the mining stock with the flexibility to invest in growth projects and weather potential downturns in commodity prices. While its total debt of $9.4 billion may seem significant, the manageable debt-to-equity ratio of 36.29% ensures that the mining stock isn’t overly leveraged.
The future outlook for Teck Resources is particularly bright. Thanks to its focus on copper. Copper is often referred to as the “metal of the future.” That’s because of its critical role in the electrification of transportation, renewable energy grids, and countless other applications in the green economy. Teck aims to increase its copper production to 800,000 tonnes annually by the end of the decade. Up from approximately 450,000 tonnes today. This ambitious goal positions Teck to benefit from the expected surge in copper demand.
Dividend investors may also find Teck attractive. While its current dividend yield of 0.80% isn’t particularly high, the mining stock’s low payout ratio of 17.18% suggests plenty of room for dividend growth in the future as earnings rise. This makes Teck not only a potential growth stock but also a budding dividend play.
Bottom line
Ultimately, Teck Resources offers a compelling mix of financial strength, growth potential, and exposure to the burgeoning demand for copper. Whether you’re a seasoned investor or just testing the waters with $200, Teck could be a strong candidate for your portfolio. This mining stock provides a way to participate in the energy transition. All through its strategic focus, expanding copper operations, and solid financial foundation — all while potentially growing your investment over time.
