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LyondellBasell and More Big Movers in Basic Materials on August 27, 2012
The market is doing well so far today. The Nasdaq has climbed 0.5%; the S&P 500 has increased 0.3%; and the Dow is up 0.1%. 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.
Despite a good day for the overall market so far, the Basic Materials sector (XLB) is down 0.1% and its current biggest movers are:
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After an increase of 3.1%, Curtiss-Wright (NYSE:CW) has reached a current price of $30.18. So far today, the company's volume is 145,444 shares, 0.7 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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. CW has a PEG ratio of 2.5, which is consistent with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Increasing 2.9%, Cytec Industries (NYSE:CYT) is trading at $66.36 per share. The company's volume for the day so far is 507,702 shares. Yesterday, volume was only 467,225 shares. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for CYT is 0.93 because the stock is trading for less than its book value. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Falling 2.7%, Ternium S.A (NYSE:TX) is currently at a share price of $19.28. With 130,609 shares changing hands so far today, the company's volume is 0.3 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for TX is 3.8%. 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: Due Diligence On Dividends
Quaker (NYSE:KWR) is up 1.9% to reach a current price of $47.60 per share. This morning, the company is trading a volume of 23,823 shares. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. KWR's P/E ratio of 13.4 falls below the industry average of 14.92. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
LyondellBasell (NYSE:LYB) is currently trading at a share price of $47.01, a 1.9% decline. The company's volume is currently 1.3 million shares for the day, consistent with its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. LYB has a debt ratio of 51.2%. 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.
Cliffs Natural Resources (NYSE:CLF) has decreased to $38.23 per share, a 1.7% fall. The company's volume is currently 2.1 million shares. This is a sign that there will be less trading activity than there was yesterday. 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. 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for CLF is 1.05, which is relatively high. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Cabot (NYSE:CBT) is down 1.6% to reach $35.31 per share. The company's volume for the day so far is 94,180 shares, 0.3 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CBT has a fairly low capitalization ratio of 24.1%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
Despite a good day for the overall market so far, the Basic Materials sector (XLB) is down 0.1% and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Curtiss-Wright (NYSE:CW) | $1.37 billion | +3.1% |
| Cytec Industries (NYSE:CYT) | $2.97 billion | +2.9% |
| Ternium S.A (NYSE:TX) | $3.97 billion | -2.7% |
| Quaker (NYSE:KWR) | $608 million | +1.9% |
| LyondellBasell (NYSE:LYB) | $27.54 billion | -1.9% |
| Cliffs Natural Resources (NYSE:CLF) | $5.54 billion | -1.7% |
| Cabot (NYSE:CBT) | $2.27 billion | -1.6% |
After an increase of 3.1%, Curtiss-Wright (NYSE:CW) has reached a current price of $30.18. So far today, the company's volume is 145,444 shares, 0.7 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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. CW has a PEG ratio of 2.5, which is consistent with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Increasing 2.9%, Cytec Industries (NYSE:CYT) is trading at $66.36 per share. The company's volume for the day so far is 507,702 shares. Yesterday, volume was only 467,225 shares. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for CYT is 0.93 because the stock is trading for less than its book value. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Falling 2.7%, Ternium S.A (NYSE:TX) is currently at a share price of $19.28. With 130,609 shares changing hands so far today, the company's volume is 0.3 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for TX is 3.8%. 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: Due Diligence On Dividends
LyondellBasell (NYSE:LYB) is currently trading at a share price of $47.01, a 1.9% decline. The company's volume is currently 1.3 million shares for the day, consistent with its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. LYB has a debt ratio of 51.2%. 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.
Cliffs Natural Resources (NYSE:CLF) has decreased to $38.23 per share, a 1.7% fall. The company's volume is currently 2.1 million shares. This is a sign that there will be less trading activity than there was yesterday. 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. 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for CLF is 1.05, which is relatively high. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Cabot (NYSE:CBT) is down 1.6% to reach $35.31 per share. The company's volume for the day so far is 94,180 shares, 0.3 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CBT has a fairly low capitalization ratio of 24.1%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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