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.

At the close, Metabolix ( MBLX) was up $0.03 (2.8%) to $1.09 on light volume. Throughout the day, 67,420 shares of Metabolix exchanged hands as compared to its average daily volume of 109,900 shares. The stock ranged in a price between $1.07-$1.11 after having opened the day at $1.07 as compared to the previous trading day's close of $1.06.

Metabolix, Inc., a bioscience company, focuses on delivering sustainable solutions to the plastics and chemicals industries. It produces a family of biopolymers found in nature called polyhydroxyalkanoates, which occur naturally in living organisms and are chemically similar to polyesters. Metabolix has a market cap of $36.6 million and is part of the basic materials sector. Shares are down 15.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Metabolix a buy, no analysts rate it a sell, and 2 rate it a hold.

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

TheStreet Ratings rates Metabolix as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MBLX go as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, METABOLIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for METABOLIX INC is currently lower than what is desirable, coming in at 30.00%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MBLX's net profit margin of -969.32% significantly underperformed when compared to the industry average.
  • MBLX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.97%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The revenue fell significantly faster than the industry average of 11.3%. Since the same quarter one year prior, revenues fell by 36.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • METABOLIX INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. 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, METABOLIX INC swung to a loss, reporting -$0.88 versus $0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.80 versus -$0.88).

You can view the full analysis from the report here: Metabolix 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.

Flexible Solutions International ( FSI) was another company that pushed the Chemicals industry higher today. Flexible Solutions International was up $0.03 (5.1%) to $0.62 on light volume. Throughout the day, 14,916 shares of Flexible Solutions International exchanged hands as compared to its average daily volume of 45,300 shares. The stock ranged in a price between $0.60-$0.62 after having opened the day at $0.60 as compared to the previous trading day's close of $0.59.

Flexible Solutions International has a market cap of $8.2 million and is part of the basic materials sector. Shares are down 35.4% year-to-date as of the close of trading on Friday.

Highlights from TheStreet Ratings analysis on FSI go as follows:

You can view the full analysis from the report here: Flexible Solutions International 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.

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.

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