The best mining stocks to invest $200 in now

December 21, 2024

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The best mining stocks to invest $200 in now

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Written by Amy Leggett Wolff In Motley Fool Canada

Investing in mining stocks for a modest amount like $200 can seem like a small step into the big leagues of the stock market. However, even this small investment has the potential to grow significantly if you choose the right stock. To maximize your chances of success, it is essential to focus on mining stocks with a solid financial foundation, exposure to in-demand commodities, strong management, and a clear growth strategy. One company that checks many of these boxes is Tech Resources (Tokyo Stock Exchange:TECK.B).

Teck Resources is a heavyweight in the mining industry. It is based in Canada and specializes in the production of base metals such as copper and zinc. One of the reasons Teck is particularly compelling right now is its strategic pivot away from coal in the steel industry. Earlier this year, Teck sold its Elk Valley Resources coal business to Glencore, generating a whopping $7.3 billion in cash proceeds. This move wasn’t just about offloading old assets. But it’s a calculated move to completely refocus the company on energy-converting metals like copper. These are in high demand thanks to rapid adoption Electric vehicles (electric vehicles) and renewable energy systems.

The latest financial results highlight Teck’s flexibility and ability to adapt in a volatile market. In the third quarter of 2024, Teck posted strong earnings, including $1.7 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Largely fueled by copper operations. The Quebrada Blanca (QB2) copper mine in Chile, a key asset for TEC, has significantly increased production. This mine alone is expected to represent a significant portion of the mining stock’s future copper production, helping Teck solidify its position as a global leader in copper production.

Teck’s performance also shines when looking at key metrics like revenue growth and profitability. Over the trailing 12 months, Teck generated a 43.7% year-over-year revenue increase, bringing the total to $16.66 billion. This growth has been fueled by its strategic focus on high-margin assets and disciplined cost management. The operating margin for the mining stock is 13.86%, demonstrating its ability to generate strong returns even in a competitive industry.

In terms of financial stability, Teck has a good balance sheet, with $7.23 billion in cash as of last quarter and a current ratio of 2.92, indicating it can meet its short-term obligations with ease. This liquidity provides mining stocks with the flexibility to invest in growth projects and weather potential downturns in commodity prices. While its total debt of $9.4 billion may seem large, its manageable debt-to-equity ratio of 36.29% ensures that the mining stock is not overly leveraged.

The outlook for Teck Resources is particularly bright. Thanks to its concentration on copper. copper It is often referred to as the “metal of the future”. This is because of their critical role in transportation electrification, renewable energy grids, and countless other applications in the green economy. Teck aims to increase its copper production to 800,000 tons per year by the end of the decade. Up from about 450,000 tons today. This ambitious target positions Teck to benefit from the expected increase in demand for copper.

Dividend investors may also find Teck attractive. While the current dividend yield of 0.80% is not particularly high, the mining stock’s low payout ratio of 17.18% suggests there is plenty of room for dividend growth in the future as dividends rise. This makes Teck not only a potential growth stock but also an emerging dividend stock.

Ultimately, Teck Resources offers a compelling combination of financial strength, growth potential, and exposure to growing copper demand. Whether you’re an experienced investor or just testing with $200, Teck could be a strong candidate for your investment portfolio. This mining stock provides a way to participate in the energy transition. All through its strategic focus, expanding copper operations, and solid financial foundation – all with the potential to grow your investment over time.

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Further reading

Foolish shareholder Amy Leggett Wolff He has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has Disclosure policy.

2024

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