The Nasdaq has declined 0.2%, the S&P 500 has declined 0.2% and the Dow has fallen 0.2% on a bad morning for the market. 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 down 0.1%, outperforming the market overall. Currently, the biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|Schnitzer Steel Industries, Inc. (Nasdaq:SCHN)||$883.5 million||-4%|
|Royal Gold, Inc. (Nasdaq:RGLD)||$4.52 billion||-3.2%|
|Rentech Nitrogen Partners LP (NYSE:RNF)||$1.24 billion||+3%|
|LSB Industries, Inc. (NYSE:LXU)||$816.3 million||+2.7%|
|Innophos Holdings, Inc. (Nasdaq:IPHS)||$1.07 billion||-2.3%|
|Rockwood Holdings, Inc. (NYSE:ROC)||$3.58 billion||-1.9%|
|CIRCOR International, Inc. (NYSE:CIR)||$613.5 million||+1.7%|
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Currently trading at $31.64 per share, Schnitzer Steel Industries (Nasdaq:SCHN) has fallen 4%. So far today, 207,353 shares have changed hands. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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 SCHN is 1.19. 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.
Royal Gold (Nasdaq:RGLD) has fallen 3.2% and is currently trading at $74.33 per share. So far today, the company's volume is 569,580 shares, one times the current three-month average. A stock's volume conveys how excited investors are about it. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. RGLD's stock is trading for more than its book value with a P/B ratio of 2.46. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
Rentech Nitrogen (NYSE:RNF) has increased to a share price of $33.41, a 3% rise. The company's volume for the morning is 442,531 shares. This is 0.7 times its average daily volume. 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. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. RNF has a high dividend yield of 14.4%. This is good news for income investors as the payout could be high. 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
LSB Industries (NYSE:LXU) has risen 2.7% to hit a current price of $37.54 per share. The company's volume is currently 73,672 shares for the day, which is likely to result in less activity than yesterday's volume of 310,099 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. 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 price/sales ratio measures a company's stock market price by its revenues. LXU has a high P/S ratio of 1.06. 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 keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Slipping 2.3%, Innophos Holdings (Nasdaq:IPHS) is currently trading at $47.81 per share. So far today, the company's volume is 70,071 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. IPHS' P/E ratio of 12.7 is consistent with the industry average. 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
Rockwood Holdings (NYSE:ROC) is trading at $45.28 per share, down 1.9%. With 107,237 shares changing hands so far today, the company's volume is 0.2 times its current three-month 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. 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 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 ROC is 110%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After rising 1.7%, CIRCOR International (NYSE:CIR) is currently trading at a share price of $36. This morning, the company's volume is 40,606 shares. This is in keeping with its current daily average. Volume is an important indicator because it indicates how significant a price shift 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. CIR has a low capitalization ratio of 18.4%. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. 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.
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.