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Tickers in this Article: GOLD, LYB, DEL, PPG, PH, UFS, PCP
The morning has been good for the market. The Nasdaq is trading up 1.9%; the S&P 500 has increased 1.8%; and the Dow has climbed 1.7%. 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 2.3% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Randgold Resources Ltd (Nasdaq:GOLD)$9.41 billion+5.7%
LyondellBasell (NYSE:LYB)$27.01 billion+4.5%
Deltic (NYSE:DEL)$782.4 million+3.6%
PPG (NYSE:PPG)$16.61 billion+3.1%
Parker-Hannifin (NYSE:PH)$11.87 billion+3%
Domtar Corp (NYSE:UFS)$3.17 billion+2.9%
Precision Castparts (NYSE:PCP)$23.02 billion+2.1%
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After an increase of 5.7%, Randgold Resources Ltd (Nasdaq:GOLD) has reached a current price of $108.26. So far today, the company's volume is 656,959 shares, 1.5 times its current three-month average. The trading volume for a stock indicates the level of investor interest. A company's investment value can be 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. GOLD has a low debt ratio of 15.2%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

LyondellBasell (NYSE:LYB) is currently trading at $49.09 per share, a 4.5% increase. So far today, 2.4 million shares of the company's stock have changed hands. 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. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. 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 capitalizion ratio of 27.3% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality 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.

Increasing 3.6%, Deltic (NYSE:DEL) is trading at $64.05 per share. So far today, the company's volume is 10,385 shares, consistent with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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-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. DEL's debt-equity ratio of 26% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

PPG (NYSE:PPG) has increased to a share price of $112.13, a 3.1% rise. So far today, the company's volume is 423,208 shares. 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 most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). PPG has a P/E ratio of 18.9, high compared to the industry average of 13.08. This could mean that the market is expecting big things over the next few months or years. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?

Parker-Hannifin (NYSE:PH) has risen 3% to hit a current price of $81.84 per share. The company's volume is currently 723,040 shares for the day, 0.7 times its average over the past three months. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. PH has a PEG ratio of 1.43, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Domtar Corp (NYSE:UFS) is at $76.67 per share after an increase of 2.9%. So far today, the company's volume is 171,965 shares. This is on pace to reach yesterday's trading volume of 377,195 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. UFS has a P/B ratio of 0.89, which shows that its book value is higher than its share price. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Precision Castparts (NYSE:PCP) is up 2.1% to reach a current price of $161.80 per share. So far today, the company's volume is 113,623 shares, 0.2 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. PCP has a low dividend yield of 0.1%. A company with a low dividend yield may be a safer investment in the long run. 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

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. 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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