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POSCO and Other Big Movers In Basic Materials on September 26, 2012
The morning has been bad for the market. The Nasdaq has slipped 1%; the S&P 500 has decreased 0.5%; and the Dow is trading down 0.2%. 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 currently ahead of the overall market, down only 0.8%, and its biggest movers are currently:
Beginner's Guide To FXCM And Trading Station
Rentech Nitrogen (NYSE:RNF) is currently trading at a share price of $36.76, a 6.4% decline. So far today, the company's volume is 651,919 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. 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 14.4% is on the low end. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Falling 4.5%, Georgia (NYSE:GGC) is currently at a share price of $35.43. So far today, the company's volume is 199,588 shares, 0.2 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 5.63, GGC's P/E ratio of 16.3 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: The P/E Ratio: A Good Market-Timing Indicator
Kraton Performance Polymers (NYSE:KRA) has risen 2.8% and is currently trading at $27.06 per share. This morning, the company's volume is 205,803 shares. This is 0.6 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. KRA has a D/E ratio of 91%. 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.
Molycorp (NYSE:MCP) has moved up 2.8% and is currently trading at $11.36 per share. This morning, 3.1 million shares have been traded, consistent with the volume from yesterday while it was 7.4 million shares yesterday. Volume is an important indicator because it indicates how significant a price shift is. 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. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. MCP's P/B ratio of 0.86 indicates that its share price is lower than its book value. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. 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: How Buybacks Warps The Price-To-Book Ratio
POSCO (NYSE:PKX) is currently trading at a share price of $80.30, a 2.8% decline. The company's volume for the day so far is 219,324 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. The dividend yield for PKX is 1.1%, which is on the low end. If you are an income investor, this stock may not be attractive to you. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing
Rising 2.3%, Deltic (NYSE:DEL) is currently trading at $68.65 per share. At 7,518 shares, the company's volume so far today is 0.2 times its average over the past three months. The trading volume for a stock indicates the level of investor interest. 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. 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 DEL is a high 6.03. 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.
Compass Minerals International (NYSE:CMP) has fallen 1.9% and is currently trading at $74.44 per share. So far today, the company's volume is 97,306 shares. This is 0.3 times its average daily volume. 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 allow the investor to make a quick determination as to a company's investment value. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CMP has a debt ratio of 60.3%, which is on the high side. This means that most of the company's assets are financed through debt. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
The Basic Materials sector (XLB) is currently ahead of the overall market, down only 0.8%, and its biggest movers are currently:
| Company | Market Cap | Percentage Change |
| Rentech Nitrogen (NYSE:RNF) | $1.5 billion | -6.4% |
| Georgia (NYSE:GGC) | $1.28 billion | -4.5% |
| Kraton Performance Polymers (NYSE:KRA) | $848.6 million | +2.8% |
| Molycorp (NYSE:MCP) | $1.22 billion | +2.8% |
| POSCO (NYSE:PKX) | $25.52 billion | -2.8% |
| Deltic (NYSE:DEL) | $849.6 million | +2.3% |
| Compass Minerals International (NYSE:CMP) | $2.51 billion | -1.9% |
Rentech Nitrogen (NYSE:RNF) is currently trading at a share price of $36.76, a 6.4% decline. So far today, the company's volume is 651,919 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. 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 14.4% is on the low end. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Falling 4.5%, Georgia (NYSE:GGC) is currently at a share price of $35.43. So far today, the company's volume is 199,588 shares, 0.2 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 5.63, GGC's P/E ratio of 16.3 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: The P/E Ratio: A Good Market-Timing Indicator
Kraton Performance Polymers (NYSE:KRA) has risen 2.8% and is currently trading at $27.06 per share. This morning, the company's volume is 205,803 shares. This is 0.6 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. KRA has a D/E ratio of 91%. 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.
Molycorp (NYSE:MCP) has moved up 2.8% and is currently trading at $11.36 per share. This morning, 3.1 million shares have been traded, consistent with the volume from yesterday while it was 7.4 million shares yesterday. Volume is an important indicator because it indicates how significant a price shift is. 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. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. MCP's P/B ratio of 0.86 indicates that its share price is lower than its book value. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. 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: How Buybacks Warps The Price-To-Book Ratio
POSCO (NYSE:PKX) is currently trading at a share price of $80.30, a 2.8% decline. The company's volume for the day so far is 219,324 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. The dividend yield for PKX is 1.1%, which is on the low end. If you are an income investor, this stock may not be attractive to you. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing
Rising 2.3%, Deltic (NYSE:DEL) is currently trading at $68.65 per share. At 7,518 shares, the company's volume so far today is 0.2 times its average over the past three months. The trading volume for a stock indicates the level of investor interest. 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. 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 DEL is a high 6.03. 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.
Compass Minerals International (NYSE:CMP) has fallen 1.9% and is currently trading at $74.44 per share. So far today, the company's volume is 97,306 shares. This is 0.3 times its average daily volume. 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 allow the investor to make a quick determination as to a company's investment value. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CMP has a debt ratio of 60.3%, which is on the high side. This means that most of the company's assets are financed through debt. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
by
Investopedia Staff
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