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3 Chemicals Stocks Pushing The Industry Higher

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 115 points (0.7%) at 16,699 as of Monday, May 12, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,399 issues advancing vs. 608 declining with 135 unchanged.

The Chemicals industry as a whole closed the day up 1.9% versus the S&P 500, which was up 1.0%. Top gainers within the Chemicals industry included Flexible Solutions International ( FSI), up 5.1%, Metabolix ( MBLX), up 2.8%, Oil-Dri Corp of America ( ODC), up 2.2%, Penford ( PENX), up 6.3% and KMG Chemicals ( KMG), up 4.9%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Penford ( PENX) is one of the companies that pushed the Chemicals industry higher today. Penford was up $0.75 (6.3%) to $12.73 on light volume. Throughout the day, 14,624 shares of Penford exchanged hands as compared to its average daily volume of 22,900 shares. The stock ranged in a price between $12.09-$12.77 after having opened the day at $12.09 as compared to the previous trading day's close of $11.98.

Penford Corporation, together with its subsidiaries, develops, manufactures, and markets specialty natural-based ingredient systems for food and industrial applications primarily in the United States. Penford has a market cap of $150.6 million and is part of the basic materials sector. Shares are down 6.8% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Penford a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Penford as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on PENX go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Chemicals industry average, but is less than that of the S&P 500. The net income increased by 4.1% when compared to the same quarter one year prior, going from $1.19 million to $1.24 million.
  • Net operating cash flow has significantly increased by 92.12% to -$0.28 million when compared to the same quarter last year. In addition, PENFORD CORP has also vastly surpassed the industry average cash flow growth rate of 20.88%.
  • PENFORD CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PENFORD CORP turned its bottom line around by earning $0.32 versus -$0.77 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus $0.32).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The gross profit margin for PENFORD CORP is currently extremely low, coming in at 14.59%. Regardless of PENX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PENX's net profit margin of 1.16% is significantly lower than the industry average.

You can view the full analysis from the report here: Penford Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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