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Tickers in this Article: CLF, VAL, KOP, GGC, GRA, RNF, IOSP
The Nasdaq has moved up 0.6%, the S&P 500 is trading up 0.3% and the Dow has risen 0.3%, marking a bad morning for the market. 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.

The Basic Materials sector (XLB) is down 0.3% on a good day for the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Cliffs Natural Resources (NYSE:CLF)$6.17 billion-3.1%
The Valspar Corporation (NYSE:VAL)$4.83 billion-3%
Koppers Holdings Inc. (NYSE:KOP)$653.6 million-2.4%
Georgia Gulf Corporation (NYSE:GGC)$1.25 billion-2.2%
W.R. Grace & Co. (NYSE:GRA)$4.3 billion+2%
Rentech Nitrogen Partners LP (NYSE:RNF)$1.2 billion+1.5%
Innospec Inc. (Nasdaq:IOSP)$715.1 million+1.5%
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Cliffs Natural Resources (NYSE:CLF) is trading at $41.96 per share, down 3.1%. So far today, the company's volume is 2.6 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. CLF's D/E ratio is 67%. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Slipping 3%, Valspar (NYSE:VAL) is currently trading at $51.37 per share. With 1.2 million shares changing hands so far today, the company's volume is 1.3 times the average volume over the last three months. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. VAL has a high debt ratio of 67.1%. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

At $30.72, Koppers Holdings (NYSE:KOP) has slipped 2.4%. This morning, the company is trading a volume of 72,814 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. The capitalization ratio for KOP is 73.6%, which is fairly high. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. 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.

Georgia (NYSE:GGC) is currently trading at a share price of $35.48, a 2.2% decline. At 143,939 shares, the company's volume so far today is 0.2 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. The P/B ratio for GGC is 2.27, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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

W.R (NYSE:GRA) has increased to a share price of $58.56, a 2% rise. The company is trading at a volume of 255,140 shares. At this rate, trading activity will likely be down from yesterday when 675,314 shares changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 price/sales ratio measures a company's stock market price by its revenues. GRA has a high P/S ratio of 1.15. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.

Rentech Nitrogen (NYSE:RNF) has risen 1.5% to hit a current price of $31.84 per share. The company's volume for the day so far is 128,798 shares, 0.2 times its current three-month average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. RNF has a P/E ratio of 108.8, high compared to the industry average of 7.65. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Find P/E And PEG Ratios

Rising 1.5%, Innospec (Nasdaq:IOSP) is currently trading at $31.25 per share. So far today, the company's volume is 23,286 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 debt-equity (D/E) ratio is a leverage ratio. IOSP has a low debt-equity ratio of 10%. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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