3 Stocks Pushing The Basic Materials Sector Lower

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 Basic Materials sector as a whole closed the day down 1.3% versus the S&P 500, which was down 0.9%. Laggards within the Basic Materials sector included Pacific Booker Minerals ( PBM), down 6.7%, Timberline Resources ( TLR), down 1.6%, Atlatsa Resources ( ATL), down 4.5%, PostRock Energy ( PSTR), down 2.4% and Eurasian Minerals ( EMXX), down 3.8%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

PostRock Energy ( PSTR) is one of the companies that pushed the Basic Materials sector lower today. PostRock Energy was down $0.03 (2.4%) to $1.23 on light volume. Throughout the day, 11,787 shares of PostRock Energy exchanged hands as compared to its average daily volume of 30,900 shares. The stock ranged in price between $1.21-$1.27 after having opened the day at $1.25 as compared to the previous trading day's close of $1.26.

PostRock Energy Corporation, an independent oil and gas company, is engaged in the acquisition, exploration, development, production, and gathering of crude oil and natural gas. PostRock Energy has a market cap of $39.3 million and is part of the energy industry. Shares are up 8.6% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates PostRock Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on PSTR go as follows:

  • Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, PSTR maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
  • PSTR'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 26.64%, 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 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 Oil, Gas & Consumable Fuels industry and the overall market, POSTROCK ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for POSTROCK ENERGY CORP is rather high; currently it is at 52.89%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -29.00% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 153.69% to $1.52 million when compared to the same quarter last year. In addition, POSTROCK ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 18.80%.

You can view the full analysis from the report here: PostRock Energy Ratings Report

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At the close, Atlatsa Resources ( ATL) was down $0.02 (4.5%) to $0.36 on light volume. Throughout the day, 12,306 shares of Atlatsa Resources exchanged hands as compared to its average daily volume of 46,100 shares. The stock ranged in price between $0.36-$0.37 after having opened the day at $0.37 as compared to the previous trading day's close of $0.38.

Atlatsa Resources Corporation mines, explores for, and develops platinum group metals properties in South Africa. The company primarily explores for platinum, palladium, rhodium, gold, copper, and nickel. Atlatsa Resources has a market cap of $194.0 million and is part of the energy industry. Shares are down 33.6% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Atlatsa Resources a buy, 1 analyst rates it a sell, and none rate it a hold.

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TheStreet Ratings rates Atlatsa Resources as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on ATL go as follows:

  • Compared to other companies in the Metals & Mining industry and the overall market, ATLATSA RESOURCES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 19.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has declined marginally to -$27.73 million or 1.47% when compared to the same quarter last year. Despite a decrease in cash flow ATLATSA RESOURCES CORP is still fairing well by exceeding its industry average cash flow growth rate of -23.29%.
  • The gross profit margin for ATLATSA RESOURCES CORP is currently extremely low, coming in at 5.52%. Regardless of ATL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ATL's net profit margin of -9.05% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Atlatsa Resources Ratings Report

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Timberline Resources ( TLR) was another company that pushed the Basic Materials sector lower today. Timberline Resources was down $0.00 (1.6%) to $0.12 on light volume. Throughout the day, 55,826 shares of Timberline Resources exchanged hands as compared to its average daily volume of 125,700 shares. The stock ranged in price between $0.12-$0.12 after having opened the day at $0.12 as compared to the previous trading day's close of $0.12.

Timberline Resources has a market cap of $9.4 million and is part of the energy industry. Shares are down 28.6% year-to-date as of the close of trading on Monday.

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Highlights from TheStreet Ratings analysis on TLR go as follows:

You can view the full analysis from the report here: Timberline Resources 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.

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