Baker Hughes Inc. (BHI): 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.

Baker Hughes ( BHI) 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, Baker Hughes fell 73 cents (-1.6%) to $44.02 on average volume. Throughout the day, 5.8 million shares of Baker Hughes exchanged hands as compared to its average daily volume of four million shares. The stock ranged in price between $43.34-$44.77 after having opened the day at $44.45 as compared to the previous trading day's close of $44.75. Other companies within the Basic Materials sector that declined today were: GeoGlobal Resources ( GGR), down 55.3%, Zion Oil & Gas ( ZN), down 17.5%, Cereplast ( CERP), down 14.9%, and Pure Bioscience ( PURE), down 14.3%.
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Baker Hughes Incorporated supplies oilfield services, products, and technology services and systems to the oil and natural gas industry worldwide. Baker Hughes has a market cap of $20.7 billion and is part of the energy industry. The company has a P/E ratio of 11.2, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Shares are down 8% year to date as of the close of trading on Friday. Currently there are 12 analysts that rate Baker Hughes a buy, no analysts rate it a sell, and 11 rate it a hold.

TheStreet Ratings rates Baker Hughes 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, compelling growth in net income, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.

On the positive front, Gulf Resources ( GURE), up 19.1%, L & L Energy ( LLEN), up 16.9%, Prospect Global Resources ( PGRX), up 14.6%, and GeoPetro Resources Company ( GPR), up 11.1%, were all gainers within the basic materials sector with Peabody Energy Corporation ( BTU) 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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