3 Stocks Improving Performance Of The Materials & Construction Industry

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 94 points (0.6%) at 16,903 as of Wednesday, June 18, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,336 issues advancing vs. 1,652 declining with 168 unchanged.

The Materials & Construction industry as a whole closed the day up 0.5% versus the S&P 500, which was up 0.7%. Top gainers within the Materials & Construction industry included Integrated Electrical Services ( IESC), up 2.1%, James Hardie Industries ( JHX), up 2.2%, Pure Cycle ( PCYO), up 4.3%, Abengoa ( ABGB), up 3.8% and Xinyuan Real Estate ( XIN), up 3.1%.

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

Pure Cycle ( PCYO) is one of the companies that pushed the Materials & Construction industry higher today. Pure Cycle was up $0.26 (4.3%) to $6.29 on average volume. Throughout the day, 99,042 shares of Pure Cycle exchanged hands as compared to its average daily volume of 68,300 shares. The stock ranged in a price between $5.98-$6.67 after having opened the day at $6.00 as compared to the previous trading day's close of $6.03.

Pure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area. Pure Cycle has a market cap of $144.2 million and is part of the industrial goods sector. Shares are down 4.7% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Pure Cycle a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Pure Cycle as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from TheStreet Ratings analysis on PCYO go as follows:

  • PCYO's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 69.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PCYO's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PCYO has a quick ratio of 2.09, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Water Utilities industry and the overall market, PURE CYCLE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.44 million or 193.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: Pure Cycle 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, James Hardie Industries ( JHX) was up $1.38 (2.2%) to $65.10 on light volume. Throughout the day, 631 shares of James Hardie Industries exchanged hands as compared to its average daily volume of 4,500 shares. The stock ranged in a price between $64.67-$65.10 after having opened the day at $64.68 as compared to the previous trading day's close of $63.72.

James Hardie Industries plc, together with its subsidiaries, manufactures and sells fiber cement products and systems for interior and exterior building construction applications primarily in the United States, Canada, Australia, New Zealand, the Philippines, and Europe. James Hardie Industries has a market cap of $5.8 billion and is part of the industrial goods sector. Shares are up 11.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate James Hardie Industries a buy, no analysts rate it a sell, and 1 rates 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 James Hardie Industries as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from TheStreet Ratings analysis on JHX go as follows:

  • The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 15.2%. 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.
  • 37.38% is the gross profit margin for JAMES HARDIE INDUSTRIES PLC which we consider to be strong. It has increased from the same quarter the previous year.
  • Compared to its closing price of one year ago, JHX's share price has jumped by 45.39%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Construction Materials industry average, but is less than that of the S&P 500. The net income has significantly decreased by 168.8% when compared to the same quarter one year ago, falling from -$69.50 million to -$186.80 million.
  • JAMES HARDIE INDUSTRIES PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, JAMES HARDIE INDUSTRIES PLC increased its bottom line by earning $1.15 versus $0.51 in the prior year. For the next year, the market is expecting a contraction of 46.1% in earnings ($0.62 versus $1.15).

You can view the full analysis from the report here: James Hardie Industries 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.

Integrated Electrical Services ( IESC) was another company that pushed the Materials & Construction industry higher today. Integrated Electrical Services was up $0.13 (2.1%) to $6.18 on light volume. Throughout the day, 5,469 shares of Integrated Electrical Services exchanged hands as compared to its average daily volume of 11,300 shares. The stock ranged in a price between $5.99-$6.31 after having opened the day at $5.99 as compared to the previous trading day's close of $6.05.

Integrated Electrical Services, Inc., through its subsidiaries, provides communications, residential, commercial and industrial, and infrastructure solutions in the United States. Integrated Electrical Services has a market cap of $110.2 million and is part of the industrial goods sector. Shares are up 12.2% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Integrated Electrical Services a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Integrated Electrical Services as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth and compelling growth in net income. 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 IESC go as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • INTEGRATED ELECTRICAL SVCS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, INTEGRATED ELECTRICAL SVCS continued to lose money by earning -$0.14 versus -$0.18 in the prior year.
  • Despite the weak revenue results, IESC has outperformed against the industry average of 12.7%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Construction & Engineering industry and the overall market, INTEGRATED ELECTRICAL SVCS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INTEGRATED ELECTRICAL SVCS is rather low; currently it is at 17.19%. Regardless of IESC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.32% trails the industry average.

You can view the full analysis from the report here: Integrated Electrical Services 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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