Stock Market Series

How Are Undervalued Canadian Mining and Energy Companies Performing (Part 3)?

Without further to do, let’s finish this!

Whitecap Resources Incorporated (TSE:WCP)  is a Canada-based oil-weighted growth company focused on profitable per share growth on the company’s existing assets enhanced by opportunistic and accretive oil-based acquisitions.  Its assets include Boundary Lake property, which is located in northeast British Columbia; Valhalla North property, which is located in the Peace River Arch area of Alberta and is characterized by shallow declines and a production base, and Deep Basin properties, which include Karr, Simonette, Kakwa, Elmworth and Wapiti, which are located southwest of Grande Prairie, Alberta.

Here is the company’s financial statement analysis from 2013 to 2016 (click here if you need a refresher on accounting formulas):

Screen Shot 2017-12-01 at 9.17.27 AM

Unfortunately, I would not invest in Whitecap Resources now as the company’s retained earnings has been on the negative side since 2015.

Pursing this further, Teck Resources Limited (TSE:TECK.B)  is engaged in the business of exploring for, acquiring, developing and producing natural resources.  Through the company’s interests in mining and processing operations in Canada, the United States, Chile and Peru, Teck Resources is a seaborne exporter of steelmaking coal, and producer of copper and mined zinc.  Moreover, Teck Resources produces lead, molybdenum, silver, and various specialty and other metals, chemicals and fertilizers.  In addition, Teck Resources owns interest in the Fort Hills oil sands project and interests in other assets in the Athabasca region of Alberta.  Lastly, Teck Resources is engaged in advancing porphyry copper projects in Canada, Chile, Peru, the United States and Turkey.

Here is the company’s financial statement analysis from 2013 to 2016:

Screen Shot 2017-12-01 at 10.06.00 AM

Although Teck Resources generated negative profit in 2015 and percentage of gross profit used in depreciation is slightly higher than the other energy and mining companies in this series, Teck Resources is the ONLY company that has generated positive retained earnings in the past years.   Without looking at the performance in 2015, furthermore, Teck Resources net profit and return in equity is in upward trends.  As a result, I think Teck Resources has durable competitive advantage and is investable.

To see whether it is wise to invest in Teck Resources now, I have generated Bollinger Bands and 20-Period Simple Moving Average on StockCharts.com:

Screen Shot 2017-12-01 at 12.02.07 PM

Since the stock is trading close to the upper Bollinger Band (the red lines), therefore it is not a good time to enter the market now.   The two perfect times (I think) to buy Teck Resources stocks were in mid-July and in mid-September when the stock was trading in the lower Bollinger Band.   I would put Teck Resources in my Stock Watch List.

Lastly, Lundin Mining Corporation (TSE:LUN), established in 1994,  is a diversified Canadian-base metals mining company with operations in Chile, the United States of America, Portugal, and Sweden, primarily producing copper, nickel and zinc.  Some of the mines Lundin Mining owns include the Eagle mine located in the United States, the Neves-Corvo mine located in Portugal and the Zinkgruvan mine located in Sweden.

Here is the company’s financial statement analysis from 2013 to 2016:

Screen Shot 2017-12-01 at 10.39.46 AM

Personally, I would not invest in Lundin Mining just because the company’s retained earnings has been negative since 2015 when Lundin Mining’s revenue has been increasing from $727.78 million U.S. in 2013 to $1,545.59 million U.S.

Screen Shot 2017-12-01 at 10.41.06 AM

I do not know how management pulled this off.

 

So here you are! As you can see, it takes efforts to find the perfect investment and takes even more time to know if this investment is investable at this present moment.

I believe there are better and faster ways to find the perfect investment, but I LOVE to get “my hands dirty” and want to learn everything about investing before I hire someone else to do it for me.

So please feel free to leave your comments below! Catch you on the flip side!

 

7 thoughts on “How Are Undervalued Canadian Mining and Energy Companies Performing (Part 3)?”

  1. Don’t hire someone else to do it with you, hire someone that will advise, educate and help you make the best choice! For someone that is serious about finance, an advisor or consultant should not hesitate to go through an interview process with you. By this I mean, if you let an advisor know you are this, they should not expect your business in a first meeting, but instead go through two or three meetings to show you their strategy and how they could help you out. My advice to you, even if you don’t want an advisor is to find some investing seminars and similar events in your neighbourhood. At these you should be able to pick up a tip or two, plus you might end up finding an advisor your trust.

    Glad to see you still going strong on this experiment!

    Like

    1. Great advice. Before I started this blog, I was approached by a financial advisor who works for one of the big “financial institutions” (no names mentioned here as I do not want to get killed) and that advisor literally wanted me to open an account with the firm and wanted me to transfer all my money to their firm.
      Right now, I still have time to do all my investments decision myself. However, I may have to hire someone to advise me with better choice in the future. Hopefully, I will be able to find an advisor who are not working for the “firm” so their opinions are not biased.

      Liked by 1 person

      1. Here’s how I look at it: Bank advisors –>salaried, they essentially make the same no matter what they do for you, so you might get decent investment options, but not such a good financial plan.

        Brokerage(Freedom55, Investors Group, Edward Jones etc.) advisors are usually pure commission, which means they more you buy the more they get. This usually means, still decent investment options, but coupled with a good overall financial plan. The more money you earn, the more money they earn. Vested interests!

        Still, best to interview a few of each and pick who you form a bond with! Good luck moving forward!

        Like

      2. Thanks! I totally agree with you. There are also certified financial planners who has their own financial planning business offer similar advices like the advisors who works for banks or brokerages. But still, interviews are needed to find the one you bond the most with!

        Liked by 1 person

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