Tenaris SA (TS): Today's Featured Basic Materials Laggard

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.

Tenaris ( TS) pushed the Basic Materials sector lower today making it today's featured Basic Materials laggard. The sector as a whole closed the day down 0.1%. By the end of trading, Tenaris fell 67 cents (-1.6%) to $40.22 on heavy volume. Throughout the day, 2.2 million shares of Tenaris exchanged hands as compared to its average daily volume of 1.2 million shares. The stock ranged in price between $40.22-$41.06 after having opened the day at $40.51 as compared to the previous trading day's close of $40.89. Other companies within the Basic Materials sector that declined today were: Houston American Energy Corporation ( HUSA), down 17.6%, Penn Virginia Corporation ( PVA), down 15.9%, China Shen Zhou Mining & Resources ( SHZ), down 9.6%, and Geokinetics ( GOK), down 8.2%.
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Tenaris S.A., through its subsidiaries, engages in the manufacture and sale of steel pipe products. Tenaris has a market cap of $24.27 billion and is part of the energy industry. The company has a P/E ratio of 36.4, above the average energy industry P/E ratio of 14.8 and above the S&P 500 P/E ratio of 17.7. Shares are up 10% year to date as of the close of trading on Monday. Currently there are seven analysts that rate Tenaris a buy, no analysts rate it a sell, and four rate it a hold.

TheStreet Ratings rates Tenaris as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

On the positive front, Pacific Booker Minerals ( PBM), up 33.5%, Eurasian Minerals ( EMXX), up 10.6%, James River Coal Company ( JRCC), up 10.1%, and Energy Services of America Corporation ( ESA), up 10.1%, were all gainers within the basic materials sector with Devon Energy ( DVN) being today's featured basic materials sector leader.

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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