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Tickers in this Article: MCP, CIR, SWM, CRS, CF, UAN, DEL
The market is doing well so far today. The Nasdaq has increased 2.2%; the S&P 500 has climbed 2%; and the Dow is trading up 1.8%. 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 2%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
Molycorp Inc. (NYSE:MCP)$1.55 billion-26.9%
CIRCOR International, Inc. (NYSE:CIR)$543.5 million+10.9%
Schweitzer-Mauduit International, Inc. (NYSE:SWM)$977.5 million+5.9%
Carpenter Technology Corporation (NYSE:CRS)$2.46 billion+5.6%
CF Industries Holdings (NYSE:CF)$12.76 billion+5.3%
CVR Partners LP (NYSE:UAN)$1.88 billion-4.8%
Deltic Timber Corp (NYSE:DEL)$750.6 million+4.7%
Software Summary: Stock Screener

Shares of Molycorp (NYSE:MCP) are currently trading at $11.75, a steep decline of 26.9%. So far today, 10.9 million shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. MCP's debt ratio of 27% is on the low side. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

CIRCOR International (NYSE:CIR) is currently at $34.63 per share after a dramatic increase of 10.9%. The company's volume is currently 128,280 shares for the day, 1.3 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. CIR has a low debt-equity ratio of 25%. 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.

Schweitzer-Mauduit International (NYSE:SWM) is currently trading at $66.32 per share, a 5.9% increase. This morning, the company's volume is 103,839 shares. This is 1.5 times its average daily volume. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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. The capitalizion ratio of 23% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Rising 5.6%, Carpenter (NYSE:CRS) is currently trading at $49.53 per share. This morning, 135,731 shares have been traded, with trading activity in keeping with yesterday's while it was 339,022 shares yesterday. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. CRS has a P/E ratio of 20.4, high compared to the industry average of 14.04. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: The P/E Ratio: A Good Market-Timing Indicator

After rising 5.3%, CF Industries (NYSE:CF) is currently trading at a share price of $204.61. This morning, the company is trading a volume of one million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 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. CF's PEG ratio is 1.09. 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.

At $24.50, CVR (NYSE:UAN) has slipped 4.8%. So far today, the company's volume is 216,666 shares, one times the average volume over the last three months. 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. UAN's P/B ratio of 3.74 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

Deltic (NYSE:DEL) has risen 4.7% and is currently trading at $62.11 per share. So far today, the company's volume is 8,360 shares. This is 0.2 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. Dividend yield measures the income that a stock will generate for an investor. DEL's dividend yield of 0.5% is fairly low. If you are an income investor, this stock may not be attractive to you. 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

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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