The market is currently up, with the Nasdaq increasing 0.7%, the S&P 500 climbing 0.5% and the Dow up 0.3%. 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 0.2% and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|Kraton Performance Polymers (NYSE:KRA)||$813.1 million||-8.8%|
|Sasol Limited (NYSE:SSL)||$30.25 billion||-3.9%|
|Rentech Nitrogen (NYSE:RNF)||$1.44 billion||-2.9%|
|RPM International (NYSE:RPM)||$3.51 billion||+2.8%|
|Potash Corp./Saskatchewan (NYSE:POT)||$36.64 billion||-2.7%|
|Monsanto (NYSE:MON)||$48.47 billion||-2.2%|
|Valspar (NYSE:VAL)||$5.13 billion||+2%|
Forex Broker Summary: UFXMarkets
Kraton Performance Polymers (NYSE:KRA) has decreased to $23 per share, a 8.8% fall. At 447,945 shares, the company's volume so far today is 1.2 times its current three-month average. 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. 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 D/E ratio for KRA is 91%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Sasol Limited (NYSE:SSL) has fallen 3.9% and is currently trading at $43.73 per share. So far today, the company's volume is 627,716 shares. 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. Valuation ratios include 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. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. SSL has a PEG ratio of 4.95. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Rentech Nitrogen (NYSE:RNF) is currently trading at a share price of $36.60, a 2.9% decline. So far today, the company's volume is 1.1 million shares, 2.3 times the average daily volume. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. Compared to the industry average of 9.36, RNF's P/E ratio of 125.7 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?
After rising 2.8%, RPM International (NYSE:RPM) is currently trading at a share price of $27.37. The company is trading at a volume of 1.6 million shares. This is on pace to reach yesterday's trading volume of three million shares. The trading volume for a stock indicates the level of investor interest. Valuation ratios include 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 measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. RPM's capitalization ratio is 46.4%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Slipping 2.7%, Potash Corp./Saskatchewan (NYSE:POT) is currently trading at $41.49 per share. The company's volume for the day so far is 5.5 million shares, 0.9 times its average over the past three months. 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 price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. POT has a P/B ratio of 3.98 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: How Buybacks Warps The Price-To-Book Ratio
Monsanto (NYSE:MON) is trading at $88.98 per share, down 2.2%. So far today, 4.5 million shares have changed hands. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. MON has a dividend yield of 1.6%, which is fairly low. A company with a low dividend yield may be a safer investment in the long run. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Dividend Yield For The Downturn
Valspar (NYSE:VAL) has increased to a share price of $57.60, a 2% rise. So far today, the company's volume is 201,962 shares, 0.2 times its current daily average. Volume is an important indicator because it indicates how significant a price shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for VAL is a high 1.13. 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 compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.