Momentum Investing in Commodity Plays: Why Teck Resources (TECK) Offers High Conviction Entry Points

In the volatile world of commodity investing, momentum strategies often thrive by capitalizing on stocks that combine strong technical performance with robust fundamentals. Teck Resources Ltd (TECK), a Canadian multinational mining company, has emerged as a compelling case study for investors seeking exposure to the energy transition through copper and other critical metals. With a Zacks Momentum Style Score of A and a VGM (Value, Growth, Momentum) Score of B, TECK exemplifies how momentum investing can identify undervalued, high-trend-following stocks in the metals sector [2].

Price Strength and Technical Indicators

Teck’s stock has shown resilience despite trading near the bottom of its 52-week range ($25.40–$47.62). As of September 2025, TECK closed at $34.83, reflecting a 1.52% gain in recent trading [3]. While the stock remains below its 200-day SMA—a bearish technical signal—it has outperformed broader market indices in the last session, suggesting short-term buying interest [4]. This divergence between technical indicators and price action underscores a potential inflection point for the stock, particularly as it trades at a discount to its historical volatility.

Earnings Momentum and Production Guidance

Teck’s Q2 2025 earnings report revealed a 65.22% beat on EPS estimates ($0.38 vs. $0.23 forecast), driven by cost discipline and higher copper prices [3]. However, revenue fell short by 6.91% ($2.02 billion vs. $2.17 billion expected), triggering a 14.49% pre-market selloff. This volatility highlights the dual-edged nature of commodity plays, where earnings surprises can be both a catalyst and a risk.

The company’s long-term outlook, however, remains bullish. Teck has maintained copper production guidance of 470,000–525,000 tonnes for 2025 and aims to double output by the end of the decade [3]. This aligns with global demand for copper in renewable energy infrastructure, positioning TECK to benefit from structural tailwinds. Additionally, the firm has returned $1.1 billion to shareholders year-to-date, reinforcing its commitment to capital efficiency [3].

Zacks’ Momentum and VGM Validation

Zacks’ quantitative models further validate TECK’s momentum profile. The stock holds a Zacks Rank of #3 (Hold), but its VGM Score of B—combining favorable Value (B) and Momentum (A) Style Scores—signals a high-conviction entry point for investors [2]. Over the past 60 days, five analysts have upgraded TECK’s earnings estimates, pushing the Zacks Consensus Estimate to $1.53 per share. The stock has also delivered an average earnings surprise of +45.6%, outpacing peers in the energy and metals sector [4].

Analysts have set price targets ranging from $44 to $60, implying significant upside potential from current levels [2]. This optimism is rooted in Teck’s strategic focus on low-cost copper production and its alignment with decarbonization trends.

Strategic Implications for Momentum Investors

For momentum investors, TECK’s combination of earnings upgrades, production scalability, and strong Zacks metrics creates a compelling risk-reward profile. While the stock’s near-term volatility (e.g., the Q2 revenue miss) warrants caution, its long-term fundamentals—backed by a $1.1 billion shareholder return and decadal production goals—suggest a path to outperformance.

The key catalysts to monitor include:
1. Copper price trends: A rebound in commodity prices could amplify TECK’s earnings power.
2. Capital allocation decisions: Continued shareholder returns or reinvestment in high-margin projects will shape investor sentiment.
3. Zacks’ momentum signals: A shift in the Zacks Rank from #3 to #1 (Strong Buy) could trigger broader institutional buying.

Conclusion

Teck Resources embodies the intersection of momentum investing and commodity-driven growth. Its recent price strength, coupled with Zacks’ favorable momentum and VGM scores, positions it as a high-conviction entry point for investors seeking exposure to the energy transition. While risks such as revenue volatility and macroeconomic headwinds persist, the company’s strategic alignment with global decarbonization efforts and robust earnings momentum make it a standout in the metals sector.

Source:
[1] TECK RESOURCES LTD-CLS B has an Investment Rating of BUY; a target price of $44.000000; an Industry Subrating of Medium; a Management Subrating of High; ..., [https://uk.finance.yahoo.com/quote/TECK/]
[2] Why Teck Resources Ltd (TECK) is a Top Value Stock for ... [https://www.nasdaq.com/articles/why-teck-resources-ltd-teck-top-value-stock-long-term]
[3] Earnings call transcript: Teck Resources Q2 2025 [https://www.investing.com/news/transcripts/earnings-call-transcript-teck-resources-q2-2025-earnings-beat-eps-forecasts-stock-drops-93CH-4197527]
[4] Why This 1 Momentum Stock Could Be a Great Addition to ... [https://finviz.com/news/151183/why-this-1-momentum-stock-could-be-a-great-addition-to-your-portfolio]