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Royal Gold Inc. (RGLD): Today's Featured Basic Materials Winner

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Royal Gold (RGLD) pushed the Basic Materials sector higher today making it today's featured basic materials winner. The sector as a whole closed the day down 0.9%. By the end of trading, Royal Gold rose $1.10 (1.2%) to $95.26 on light volume. Throughout the day, 397,199 shares of Royal Gold exchanged hands as compared to its average daily volume of 724,800 shares. The stock ranged in a price between $93.65-$96.14 after having opened the day at $93.96 as compared to the previous trading day's close of $94.16. Other companies within the Basic Materials sector that increased today were: AuRico Gold (AUQ), up 20.6%, Keegan Resources (KGN), up 16%, Pure Bioscience (PURE), up 15.6%, and HyperDynamics Corporation (HDY), up 6.1%.

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Royal Gold, Inc., together with its subsidiaries, engages in the acquisition and management of precious metals royalties and similar production based interests. Royal Gold has a market cap of $5.68 billion and is part of the metals & mining industry. The company has a P/E ratio of 59.9, equal to the average metals & mining industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Shares are up 39.6% year to date as of the close of trading on Tuesday. Currently there are no analysts that rate Royal Gold a buy, no analysts rate it a sell, and five rate it a hold.

TheStreet Ratings rates Royal Gold as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

On the negative front, Ferro (FOE), down 24.2%, Lizhan Environmental (LZEN), down 18.9%, Energy Services of America Corporation (ESA), down 10.2%, and Samson Oil & Gas (SSN), down 8.8%, were all laggards within the basic materials sector with Valero Energy Corporation (VLO) being today's basic materials sector laggard.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the basic materials sector could consider Materials Select Sector SPDR (XLB) while those bearish on the basic materials sector could consider ProShares Short Basic Materials Fd (SBM).

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