Teck Resources Ltd (TSX:TECK.B)(NYSE:TECK) is up more than 50% in the past six months and it still presents a good value investment. Rising commodity prices have helped the company’s bottom line more than double in its most recent quarterly earnings.
Steelmaking coal prices have been on the rise and as long as that continues, so too will the company’s impressive results. However, despite the strong performance, the stock still trades at less than nine times earnings and only slightly above its book value. A big reason for that is the dependence that Teck Resources has on commodity prices, and how they can significantly impact the mining company’s performance.
Investors only need to look at what oil prices have done to stocks in that industry as an example of how commodity prices can crush share prices. Enbridge Inc (TSX:ENB)(NYSE:ENB) has produced solid results despite a low price of oil, but in the past year its share price has been down 13% as investors remain hesitant to invest in the industry. A downturn in steelmaking coal could result in a similar impact on Teck Resources.
However, that hasn’t happened yet, and that could make it a great time to buy the stock before it climbs even higher. The danger is that the share price is near a five-year high and that could make investors a little nervous that the stock may have peaked.
Where the stock goes from here will be largely dictated by how strong its fourth-quarter earnings will be a month from now. Another strong result and an earnings beat could lead the share price above $40.
