Dips in the stock market often prompt many investors to take their money out of the market and park it somewhere they feel might be safer. As of this writing, the S&P/TSX Composite Index seems to be doing really well. The benchmark index for the Canadian stock market is up by over 25% from its 52-week low, indicating a bull market.
Despite the broader market being on the uptick, not every stock has been performing well. Savvier investors know that some of the best opportunities to invest in high-quality businesses is at lower prices. One Canadian stock that seems to be going against the broader market trend is Teck Resources Ltd. (TSX: TECK.B).
While down considerably from its 52-week high, this TSX copper stock boasts strong long-term growth potential. Today, we’ll take a look at why it might be an excellent pick for your self-directed portfolio despite its recent performance.
Source: Getty Images
Teck Resources
Teck is a diversified mining company headquartered in Vancouver with a $21.9 billion market capitalization. The company’s core focus is on metallurgical resources, followed by copper and zinc, and it has oil sands operations in Canada, the US, Chile, and Peru. The company is ranked the second-largest seaborne metallurgical coal exporter and a top-three zinc mining company.
The company’s fiscal report for 2024 saw it post $283 million in net income and $9.1 billion in revenue. All the commodities it produces are essential materials for various applications, ranging from infrastructure to electric vehicles. The global demand for copper and zinc is only expected to grow in the coming years. The rising demand should, in turn, benefit the company and its investors.
The April 2025-ending first quarter for fiscal 2025 saw Teck report a 41.4% year-over-year increase in its revenue, hitting $2.3 billion compared to $1.6 billion from the same period last year. One of the reasons contributing to its performance on the stock market is the fine the company faces for lead and selenium contamination in British Columbia. The pollution issues its operations cause are a risk to its costs and reputation.
Foolish takeaway
Why might Teck Resources stock be a good investment, you ask? I think its focus on producing copper and zinc might be the best reason. Teck offloaded its steelmaking coal business a little over a year ago to focus more on zinc and copper. Thermal coal prices are volatile, limiting the company’s exposure to it. Meanwhile, copper and zinc are expected to become increasingly expensive in the coming years.
The long-term view is that green energy and infrastructure requirements will increase demand for the commodities it produces. Higher prices for the underlying commodity mean better margins for the mining company.
Despite all the potential positives, Teck isn’t a risk-free investment. Environmental regulations can change, and so can commodity prices. If the demand for electric vehicles slows down, the demand for copper might soften. However, the industry trends as we see them today point toward a better future for copper mining companies. Teck Resources offers diversified exposure to a wide mix of commodities with potentially high long-term-demand commodities. It can be a good investment at current levels.
