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Tickers in this Article: CLF, TCK, GOLD, ROC, BBL, RIO, AKS
The market is doing well so far today. The Nasdaq is up 1.1%; the S&P 500 has risen 0.6%; and the Dow has climbed 0.4%. The basic materials sector is the category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. This sector includes the mining and refining of metals, chemical producers and forestry products. The basic materials sector is sensitive to changes in the business cycle. Because the sector supplies materials for construction, it depends on a strong economy. This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as gold or other metals, is largely demand driven.

Outperforming the market overall, the Basic Materials sector (XLB) is up 1.5% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Cliffs Natural Resources (NYSE:CLF)$6.15 billion+7.1%
Teck (NYSE:TCK)$18.7 billion+6.2%
Randgold Resources Ltd (Nasdaq:GOLD)$10.51 billion+5.1%
Rockwood Holdings (NYSE:ROC)$3.84 billion+5.1%
BHP Billiton plc (NYSE:BBL)$170.7 billion+4.1%
Rio Tinto plc (NYSE:RIO)$95.01 billion+4.1%
AK (NYSE:AKS)$712.4 million-3.3%
Software Summary: Finviz.com Stock Screener

After an increase of 7.1%, Cliffs Natural Resources (NYSE:CLF) has reached a current price of $46.26. So far today, the company's volume is 9.3 million shares, 0.9 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The debt ratio is calculated by dividing total liabilities by total assets. CLF has a debt ratio of 58.6%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Teck (NYSE:TCK) has moved up 6.2% and is currently trading at $34.43 per share. The company is currently trading a volume of 2.2 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The debt-equity ratio of 39% is relatively low. This shows that the company's assets are financed primarily through equity. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

After rising 5.1%, Randgold Resources Ltd (Nasdaq:GOLD) is currently trading at a share price of $120.22. So far today, the company's volume is 856,106 shares, 1.3 times its current three-month average. The trading volume for a stock indicates the level of investor interest. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalizion ratio of 0.1% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Rockwood Holdings (NYSE:ROC) has increased to a share price of $52.00, a 5.1% rise. The company is trading at a volume of 614,937 shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. ROC has a dividend yield of 2.8%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Dividend Yield For The Downturn

Rising 4.1%, BHP Billiton plc (NYSE:BBL) is currently trading at $66.46 per share. The company's volume is currently 1.3 million shares for the day, 1.3 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. BBL's PEG ratio is 0.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Increasing 4.1%, Rio Tinto plc (NYSE:RIO) is trading at $53.37 per share. So far today, the company's volume is 2.8 million shares. Volume indicates the level of interest that investors have in a company at its current price. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. RIO has a P/B ratio of 1.78 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Investment Valuation Ratios: Price/Book Value Ratio

AK (NYSE:AKS) has decreased to $6.23 per share, a 3.3% fall. At 8.7 million shares, the company's volume so far today is one times the average volume over the last three months. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for AKS is 0.11, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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