"Teck Resources (NYSE:
TCK), a current favorite, is a a well-rounded commodity ?rm with an emphasis on coal," says
Mike Cintolo. Here's his latest in
The Cabot Top Ten Report
"Almost exactly one year ago, commodity-related stocks were crushed as the market crashed and the global economy fell into a ditch.
"Today, the outlook is far brighter, and the U.S. dollar remains in a downtrend—both of which are driving demand for commodity stocks.
"A Canadian-based company, Teck Resources is strong today because of its broad commodity exposure, especially in hard coking coal, which China and other emerging market countries are gobbling up to make steel.
"Teck, in fact, is the second largest seaborne supplier of hard coking coal, which, combined with its relationship with China Investment Corp..
"The Chinese sovereign wealth manager, which bought a 17% stake in Teck this year, makes it more than your run-of-the-mill steel or coal company. (It also has stakes in copper, zinc, molybdenum and a little gold, but coal is driving the results.)
"Earnings have been falling off a cliff, but Teck remains solidly pro?table, and the bottom line should begin to rebound soon. It's an intriguing story in an environment that is favoring commodity plays. Earnings are due out on October 29.
"Technically, TCK had a huge decline last year and a huge rebound this year, but we believe the stock is providing another entry point here—after zooming from 15 to 29 in July and early August, TCK built a two-month launching pad in the 20s.
"The stock just broke free from an eight-week base last week and is resuming its major uptrend. Heavy volume is a sign that the overall uptrend is resuming. Yes, it's up a lot from its lows this year, but we think you can buy some around here, and keep a tight stop around 27-28."
