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Tickers in this Article: SEE, BAK, SCHN, CLF, SQM, RIO, ABX
So far today, the Nasdaq is trading down 0.2%, the S&P 500 has been relatively flat and the Dow is unchanged. 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.

On a quiet day for the market overall so far, the Basic Materials sector (XLB) has slipped 0.1% and its biggest movers are currently:
CompanyMarket CapPercentage Change
Sealed Air (NYSE:SEE)$2.55 billion+7.3%
Braskem SA (NYSE:BAK)$5.46 billion-5.9%
Schnitzer Steel Industries (Nasdaq:SCHN)$776.5 million-5.8%
Cliffs Natural Resources (NYSE:CLF)$5.32 billion-2.9%
Sociedad Quimica y Minera (NYSE:SQM)$15.79 billion+2.8%
Rio Tinto plc (NYSE:RIO)$83.63 billion-2.4%
Barrick Gold Corporation (NYSE:ABX)$37.75 billion-1.8%
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Increasing 7.3%, Sealed Air (NYSE:SEE) is trading at $14.09 per share. The company's volume for the day so far is 3.5 million shares, one times its average over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. SEE has a P/B ratio of 0.95, which shows that its book value is higher than its share price. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Braskem SA (NYSE:BAK) is down 5.9% to reach $12.82 per share. The company's volume is currently 274,976 shares. This is a sign that there will be less trading activity than there was yesterday. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for BAK is 0.29, which is relatively low. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.

At $27.29, Schnitzer Steel Industries (Nasdaq:SCHN) has slipped 5.8%. So far today, the company's volume is 265,499 shares, 0.7 times the current daily average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. 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 is calculated by dividing total liabilities by total assets. SCHN's debt ratio of 39.3% is on the low side. A low debt ratio means the company has more available cash flow. 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 fallen 2.9% and is currently trading at $36.28 per share. So far today, three million shares have changed hands. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. CLF has a D/E ratio of 67%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Sociedad Quimica y Minera (NYSE:SQM) has moved up 2.8% and is currently trading at $61.67 per share. At 314,371 shares, the company's volume so far today is 0.9 times the average volume over the last three months. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. SQM has a capitalization ratio of 39.3%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Falling 2.4%, Rio Tinto plc (NYSE:RIO) is currently at a share price of $44.05. The company is trading at a volume of 1.6 million shares. If a stock price moves on high volume, this means that the change is a significant one. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. RIO has a dividend yield of 3.2%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Guide To Stock-Picking Strategies: Income Investing

Barrick Gold Corporation (NYSE:ABX) is trading at $37.06 per share, down 1.8%. The company's volume is currently 3.4 million shares for the day, consistent with its current daily average. 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/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. PEG ratio for ABX is consistent with the industry average at 4.6. 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.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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