3 Stocks Moving The Chemicals Industry Upward

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All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 16 points (0.1%) at 16,738 as of Wednesday, June 4, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,467 issues advancing vs. 1,547 declining with 149 unchanged.

The Chemicals industry as a whole closed the day up 0.1% versus the S&P 500, which was up 0.2%. Top gainers within the Chemicals industry included Valhi ( VHI), up 2.8%, Amyris ( AMRS), up 2.9%, A Schulman ( SHLM), up 2.8% and Senomyx ( SNMX), up 5.8%.

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

A Schulman ( SHLM) is one of the companies that pushed the Chemicals industry higher today. A Schulman was up $0.97 (2.8%) to $35.13 on average volume. Throughout the day, 170,355 shares of A Schulman exchanged hands as compared to its average daily volume of 128,900 shares. The stock ranged in a price between $34.10-$35.49 after having opened the day at $34.14 as compared to the previous trading day's close of $34.16.

A. Schulman, Inc. supplies plastic compounds and resins for packaging, automotive, consumer products, and industrial applications. A Schulman has a market cap of $1.0 billion and is part of the basic materials sector. Shares are down 3.1% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates A Schulman a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates A Schulman 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 and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on SHLM go as follows:

  • SHLM's revenue growth has slightly outpaced the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 14.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
  • SCHULMAN (A.) INC's earnings per share declined by 46.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SCHULMAN (A.) INC reported lower earnings of $1.11 versus $1.75 in the prior year. This year, the market expects an improvement in earnings ($2.28 versus $1.11).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for SCHULMAN (A.) INC is currently extremely low, coming in at 14.77%. Regardless of SHLM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SHLM's net profit margin of 1.16% is significantly lower than the industry average.

You can view the full analysis from the report here: A Schulman Ratings Report

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