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Tickers in this Article: SSD, LYB, RAVN, NEM, TPCG, WLK, DEL
It's been a good morning for the market. The Nasdaq has moved up 1.4%; the S&P 500 is trading up 1.1%; and the Dow has risen 0.8%. 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.

Underperforming the market overall, the Basic Materials sector (XLB) is up 1%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
Simpson Manufacturing Co, Inc. (NYSE:SSD)$1.29 billion-9.1%
LyondellBasell Industries NV (NYSE:LYB)$23.5 billion+7.5%
Raven Industries, Inc. (Nasdaq:RAVN)$1.16 billion+5.9%
Newmont Mining (NYSE:NEM)$22.61 billion-5.8%
TPC Group, Inc. (Nasdaq:TPCG)$603.7 million+4.8%
Westlake Chemical Corporation (NYSE:WLK)$3.83 billion+3.8%
Deltic Timber Corp (NYSE:DEL)$773.8 million+3.7%
Broker Summary: E-Trade Financial

Simpson Manufacturing Co (NYSE:SSD) is down 9.1% to reach $24.25 per share. The company is currently trading a volume of 149,258 shares. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. SSD has a high P/S ratio of 2.48. 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.

LyondellBasell (NYSE:LYB) is currently trading at $43.96 per share, a 7.5% increase. So far today, the company's volume is 4.4 million shares, 1.6 times its current three-month average. A stock's volume conveys how excited investors are about it. 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 gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. LYB's debt ratio is 52.1%. 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.

Raven Industries (Nasdaq:RAVN) has risen 5.9% to hit a current price of $33.89 per share. This morning, the company's volume is 32,109 shares. This is 0.3 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. RAVN has a P/B ratio of 6.25 which shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio

After a decline of 5.8%, Newmont Mining (NYSE:NEM) has hit a share price of $43.41. At 5.4 million shares, the company's volume so far today is. If a stock price moves on high volume, this means that the change is a significant one. 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. NEM's P/E ratio is 68.8. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Increasing 4.8%, TPC Group (Nasdaq:TPCG) is trading at $40.42 per share. The company's volume for the day so far is 74,160 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. TPCG has a low P/S ratio of 0.25. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Increasing 3.8%, Westlake (NYSE:WLK) is trading at $59.66 per share. With 193,775 shares changing hands so far today, the company's volume is in keeping with its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. WLK has a low debt ratio of 44.1%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Deltic (NYSE:DEL) has moved up 3.7% and is currently trading at $63.43 per share. So far today, the company's volume is 10,340 shares. This is 0.4 times its average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 29% is relatively low. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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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