Teck Resources Ltd.'s quarterly earnings this week didn't go over too well on the Street, as earnings per share of 68 cents came up a couple dimes short of consensus estimates. But the company's sturdy balance sheet, and large number of possible projects in the pipeline, have analysts pointing to rewards looming for shareholders.
Orest Wowkodaw, analyst with Canaccord Genuity, said Teck will likely hike its dividend within the next three to six months, citing strong free cash flow and minimal debt maturities in the near to medium term.
While cost pressures are starting to emerge, Teck is, after all, the largest base metals producer in Canada and higher copper and coal production is expected next year at a time of strong returns in those markets.
Teck also has a deep portfolio of development projects that should see completed feasibility and pre-feasibility studies over the next 12 months. These include studies for the Quebrada Blanca copper concentrate expansion project in Chile and the Galore Creek mine in British Columbia.
TD Newcrest analyst Greg Barnes said he does not expect that Teck would be required to spend significant capital on these projects before 2012, and in the interim, building cash wouldn't be an unwise choice by management. "That being said, we continue to see scope for Teck to raise its annual dividend of 40 cents per share," Mr. Barnes said.
Upside: Mr. Wowkodaw hiked his target on the stock by $5 to $56 and maintained a buy rating. Mr. Barnes maintained his 12-month target of $54 and continues to recommend the stock as an "action list buy"
Related: Teck posts $355-million profit
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Thanks to a marked improvement in fundamentals for agriculture commodities, Canadian Pacific Railway Ltd. has greater-than-expected potential to see higher volume growth in sulphur and fertilizer traffic, said TD Newcrest analyst Cherilyn Radbourne. The railway this week reported earnings per share and operating income above estimates, but Ms. Radbourne said she's concerned about CP's exposure to future pension expenses.
Upside: Ms. Radbourne hiked her target on the stock by $6 to $75.00.
Related: TD raises target price on CP
Related: Rail giants loath to offer guidance in shaky economy
MacDonald Dettwiler and Associates enjoyed a robust third quarter and a dividend payment appears imminent given strong cash flow, said Canaccord Genuity analyst Jeff Rath. Most of the company's business units are returning to growth, he said.
Upside: Mr. Rath hiked his target to $58 and maintained a buy recommendation.
RBC Dominion Securities Inc. analyst Mike Abramsky has almost tripled his price target on Motricity Inc., a provider of mobile data solutions. Not only will Motricity benefit from an improving outlook for new global customers and likely higher earnings - but the company is an attractive takeout candidate, possibly in the $32 to $34 range, he said.
Upside: Mr. Abramsky hiked his price target to $28 from $11
Canam Group Inc. is "steering through the downturn beautifully" and is undervalued, said National Bank Financial analyst Benoit Caron. A solid balance sheet allowed the company to benefit from bottom-of-the-cycle M&A opportunities and the stock is now trading 12 per cent below book value and 19 per cent below Mr. Caron's intrinsic value estimate.
Upside: Mr. Caron's hiked his target by 50 cents to $10.00 and continues to rate the stock as an outperform.