Vale SA (VALE): 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.

Vale ( VALE) pushed the Basic Materials sector lower today making it today's featured Basic Materials laggard. The sector as a whole closed the day up 0.9%. By the end of trading, Vale fell 19 cents (-1.1%) to $17.11 on average volume. Throughout the day, 18.4 million shares of Vale exchanged hands as compared to its average daily volume of 21.4 million shares. The stock ranged in price between $16.92-$17.32 after having opened the day at $17.31 as compared to the previous trading day's close of $17.30. Other companies within the Basic Materials sector that declined today were: Recon Technology ( RCON), down 29.4%, Pure Bioscience ( PURE), down 13.7%, ZaZa Energy ( ZAZA), down 11.2%, and Apco Oil and Gas International ( APAGF), down 10.3%.
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Vale S.A. engages in the exploration, production, and sale of basic metals in Brazil and internationally. The company is also involved in energy, logistics, and steel businesses. Vale has a market cap of $124.19 billion and is part of the metals & mining industry. The company has a P/E ratio of four, below the S&P 500 P/E ratio of 17.7. Shares are down 18.7% year to date as of the close of trading on Thursday. Currently there are three analysts that rate Vale a buy, two analysts rate it a sell, and eight rate it a hold.

TheStreet Ratings rates Vale as a hold. 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 and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

On the positive front, HyperDynamics Corporation ( HDY), up 22%, General Steel Holdings ( GSI), up 22%, BMB Munai ( BMBM), up 14%, and MV Oil ( MVO), up 13.3%, were all gainers within the basic materials sector with Encana ( ECA) 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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