10 Best Materials Stocks to Buy According to Hedge Funds

5. Teck Resources Limited (NYSE:TECK)

Number of Hedge Fund Investors  in Q1 2024: 61

Teck Resources Limited (NYSE:TECK) is an industrial raw materials company that produces and sells key materials such as lead, copper, and zinc. The firm has invested heavily in copper production over the past couple of years, allowing it to establish a foothold in the industry that can see significant demand from EV manufacturing. Teck Resources Limited (NYSE:TECK) appears to be cognizant of the benefits of focusing on copper as it is selling its Elk Valley coal site for a $9 billion price tag. This sale is expected to allow the firm to focus on industrial metals. Out of these proceeds, Teck Resources Limited (NYSE:TECK) will pay $500 million to investors in the form of a share buyback, which could inject some juice into its stock. The firm’s earnings report in April 2024 was also important for its copper outlook. The results saw Teck Resources Limited (NYSE:TECK) guide its 2024 copper production to sit between 465,000 tons to 540,000 tons, which is a sizeable jump over the firm’s 2024 production of 296,500 tons.

Greenlight Capital mentioned Teck Resources Limited (NYSE:TECK) in its Q1 2024 investor letter. Here is what the firm said:

Finally, we established a medium-sized macro position to benefit from higher copper prices. Long-time partners may recall that in 2021 we presented Teck Resources (TECK) at the Sohn Investment Conference. At the time, our thesis was based on a combination of being bullish on copper and believing that TECK was about to exit the penalty box after a multi-year investment in a new copper mine that was on the brink of finally coming online. Back then, TECK traded at C$31.09. Based on copper at $4.50 a pound, we thought the stock was undervalued by half. It has since doubled (and dramatically outperformed copper peer Freeport-McMoRan) and,trial u over time, we have reduced the position into strength.

. . .Time has passed, the new mines have come online and the anticipated gap between supply and demand is likely to open up in the next year. While we still believe TECK is undervalued should copper prices rise, it is less undervalued than it once was. Our thesis now is that copper supply is about to fall short of demand, forcing prices substantially higher. Once again, we think the best way to invest in that thesis is the most direct way – in this case through options on copper futures.