New Investments Improve Teck’s Outlook

Article Excerpt

TECK COMINCO LTD. $51 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 419.3 million; Market cap: $21.4 billion; SI Rating: Average) continues to use its strong cash flow to cut its reliance on zinc, which accounts for a third of its revenue. It recently acquired copper producer Aur Resources Ltd., which will double its copper production. The company has also increased its ownership in Fording Canadian Coal Trust, from 8.7% to 19.95%, and its stake in the Fort Hills oil sands project, from 15% to 20%. These moves cost Teck over $5 billion in cash and stock. All of Teck’s commodities are priced in U.S. dollars, so the strong Canadian dollar will probably cut its 2007 earnings by roughly $0.15 a share. Still, Teck should earn $5.16 a share in 2007, and the stock trades at just 9.9 times that figure. Teck’s new investments should also give it more cash to increase its $1.00 dividend, which yields 2.0%. Teck Cominco…

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