Mining Shares Once Again Trading At Attractive Valuations

posted in: Charts, Gold, Gold Stocks | 0

According to RBC mining share valuations have flipped considerably in the span of less than two months:



After reaching a roughly 15% premium to net asset value (NAV) at the February peak the recent underperformance in mining shares relative to metals has given way to an 11.3% discount to NAV currently. While this is certainly far from a screaming buy signal it is a sign that there is value to be had out there after many market participants were complaining of share price frothiness barely more than a month ago.

The price action in Canada’s largest diversified mining company, Teck Resources (NYSE:TECK), stood out to me today:


TECK (Daily)


TECK printed a large bullish engulfing candlestick on above average trading volume. If TECK can decisively break above $22 the stock could be well on its way to resolving its recent multi-month consolidation (after a huge rally during 2016) to the upside:


TECK (Weekly)


There are green shoots springing up again in the mining sector and the recent volatility and relatively lackluster performance (especially relative to metals prices) has kept the wall of worry intact. Bull markets are built on skepticism and there is certainly no shortage of skepticism out there on mining stocks. TECK is a name to watch and one which investors should consider having in their portfolios.


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