Royal Dutch Shell PLC (RDS.A): 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.

Royal Dutch Shell ( RDS.A) pushed the Basic Materials sector lower today making it today's featured Basic Materials laggard. The sector as a whole closed the day down 1%. By the end of trading, Royal Dutch Shell fell $1.96 (-2.8%) to $68.95 on heavy volume. Throughout the day, 4.2 million shares of Royal Dutch Shell exchanged hands as compared to its average daily volume of 1.7 million shares. The stock ranged in price between $68.95-$69.64 after having opened the day at $69.39 as compared to the previous trading day's close of $70.91. Other companies within the Basic Materials sector that declined today were: Quaterra Resources ( QMM), down 19.1%, Pure Bioscience ( PURE), down 10.2%, Mexco Energy Corporation ( MXC), down 9%, and Houston American Energy Corporation ( HUSA), down 8.3%.
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Royal Dutch Shell plc operates as an oil and gas company worldwide. The company explores for and extracts crude oil and natural gas. Royal Dutch Shell has a market cap of $224.56 billion and is part of the energy industry. The company has a P/E ratio of 8.9, below the S&P 500 P/E ratio of 17.7. Shares are up 2.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Royal Dutch Shell as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

On the positive front, Prospect Global Resources ( PGRX), up 26.2%, China Natural Resources ( CHNR), up 14.2%, Oxford Resource Partners ( OXF), up 9.5%, and Penford Corporation ( PENX), up 8.7%, were all gainers within the basic materials sector with Randgold Resources ( GOLD) 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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