TECK RESOURCES LTD. $29 - Toronto symbol TCK.B

TECK RESOURCES LTD. $29 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 586.0 million; Market cap: $17.0 billion; Priceto- sales ratio: 1.4; Dividend yield: 2.8%; TSINetwork Rating: Average; www.teck.com) is selling more metallurgical coal and copper thanks to recent expansion projects.

Coal sales in the three months ended June 30, 2012 rose 19.6%, to 6.7 million tonnes from 5.6 million a year earlier. Copper sales rose 10.4%, to 85,000 tonnes from 77,000 tonnes.

However, slowing growth in China and India cut coal prices by 25.7% from a year earlier. Copper prices fell 13.8%.

That’s why Teck’s earnings in the quarter fell 52.9%, to $312 million or $0.53 a share. It earned $663 million, or $1.12 a share, a year earlier. Cash flow per share fell 39.2%, to $1.24 from $2.04, while revenue declined 8.4%, to $2.6 billion from $2.8 billion.

Weak commodity prices will probably continue to weigh on Teck’s earnings for second half of 2012. In response, the company will spend $2.1 billion upgrading its mines in 2012. That’s down from its earlier forecast of $2.3 billion.

Teck may also take advantage of low commodity prices to buy smaller mining companies. It holds cash of $3.6 billion, or $6.21 a share. Long-term debt of $6.7 billion is a manageable 39% of its market cap.

Teck is a buy.

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