3 Stocks Driving The Chemicals 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.

The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 20 points (0.1%) at 16,715 as of Tuesday, May 13, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,363 issues advancing vs. 1,697 declining with 123 unchanged.

The Chemicals industry as a whole closed the day down 0.4% versus the S&P 500, which was unchanged. Top gainers within the Chemicals industry included Metabolix ( MBLX), up 8.3%, Methes Energies International ( MEIL), up 9.2%, Valhi ( VHI), up 2.0%, Lightbridge ( LTBR), up 1.7% and Gevo ( GEVO), up 2.0%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Gevo ( GEVO) is one of the companies that pushed the Chemicals industry higher today. Gevo was up $0.02 (2.0%) to $1.02 on light volume. Throughout the day, 607,218 shares of Gevo exchanged hands as compared to its average daily volume of 1,282,300 shares. The stock ranged in a price between $0.98-$1.04 after having opened the day at $1.02 as compared to the previous trading day's close of $1.00.

Gevo, Inc., a renewable chemicals and biofuels company, focuses primarily on the production and sale of isobutanol and related products from renewable feedstocks. Gevo has a market cap of $61.7 million and is part of the basic materials sector. Shares are down 30.1% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Gevo a buy, no analysts rate it a sell, and 1 rates it a hold.

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

Highlights from TheStreet Ratings analysis on GEVO go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 31.5% when compared to the same quarter one year ago, falling from -$13.18 million to -$17.33 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, GEVO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Looking at the price performance of GEVO's shares over the past 12 months, there is not much good news to report: the stock is down 46.07%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
  • GEVO, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • GEVO INC' earnings per share from the most recent quarter came in slightly below the year earlier 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, GEVO INC continued to lose money by earning -$1.49 versus -$2.01 in the prior year. This year, the market expects an improvement in earnings (-$0.69 versus -$1.49).

You can view the full analysis from the report here: Gevo 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, Valhi ( VHI) was up $0.14 (2.0%) to $7.20 on light volume. Throughout the day, 23,684 shares of Valhi exchanged hands as compared to its average daily volume of 38,700 shares. The stock ranged in a price between $7.00-$7.32 after having opened the day at $7.00 as compared to the previous trading day's close of $7.06.

Valhi, Inc., through its subsidiaries, operates in the chemicals, component products, and waste management businesses. Valhi has a market cap of $2.5 billion and is part of the basic materials sector. Shares are down 59.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Valhi a buy, 1 analyst rates it a sell, and none 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 Valhi 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on VHI go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 348.6% when compared to the same quarter one year prior, rising from $3.50 million to $15.70 million.
  • Net operating cash flow has significantly increased by 167.31% to $68.70 million when compared to the same quarter last year. In addition, VALHI INC has also vastly surpassed the industry average cash flow growth rate of 20.88%.
  • VALHI INC reported significant earnings per share improvement 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, VALHI INC swung to a loss, reporting -$0.29 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.10 versus -$0.29).
  • The gross profit margin for VALHI INC is rather low; currently it is at 20.81%. Regardless of VHI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VHI's net profit margin of 3.92% is significantly lower than the industry average.
  • 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, VALHI INC's return on equity significantly trails that of both the industry average and the S&P 500.

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

Metabolix ( MBLX) was another company that pushed the Chemicals industry higher today. Metabolix was up $0.09 (8.3%) to $1.17 on average volume. Throughout the day, 122,457 shares of Metabolix exchanged hands as compared to its average daily volume of 108,600 shares. The stock ranged in a price between $1.09-$1.18 after having opened the day at $1.11 as compared to the previous trading day's close of $1.08.

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 $37.0 million and is part of the basic materials sector. Shares are down 14.3% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Metabolix a buy, no analysts rate it a sell, and 2 rate it a hold.

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.

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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