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 0.8% versus the S&P 500, which was down 0.2%. Laggards within the Basic Materials sector included Sonde Resources ( SOQ), down 15.8%, Ossen Innovation ( OSN), down 4.2%, Minco Gold ( MGH), down 4.4%, Lilis Energy ( LLEX), down 4.3% and WSP Holdings ( WH), down 8.9%.

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

WSP Holdings ( WH) is one of the companies that pushed the Basic Materials sector lower today. WSP Holdings was down $0.07 (8.9%) to $0.72 on light volume. Throughout the day, 9,916 shares of WSP Holdings exchanged hands as compared to its average daily volume of 59,200 shares. The stock ranged in price between $0.72-$0.80 after having opened the day at $0.79 as compared to the previous trading day's close of $0.79.

WSP Holdings Limited, together with its subsidiaries, manufactures and sells seamless oil country tubular goods. WSP Holdings has a market cap of $16.1 million and is part of the energy industry. Shares are down 71.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates WSP Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on WH go as follows:

  • WSP HOLDINGS LTD 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, WSP HOLDINGS LTD reported poor results of -$4.12 versus -$3.30 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 55.5% when compared to the same quarter one year ago, falling from -$16.61 million to -$25.83 million.
  • The debt-to-equity ratio is very high at 6.75 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.33, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Energy Equipment & Services industry and the overall market, WSP HOLDINGS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WSP HOLDINGS LTD is rather low; currently it is at 20.56%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, WH's net profit margin of -21.64% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: WSP Holdings Ratings Report

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At the close, Ossen Innovation ( OSN) was down $0.04 (4.2%) to $0.91 on light volume. Throughout the day, 6,621 shares of Ossen Innovation exchanged hands as compared to its average daily volume of 24,100 shares. The stock ranged in price between $0.90-$0.96 after having opened the day at $0.90 as compared to the previous trading day's close of $0.95.

Ossen Innovation Co., Ltd. manufactures and sells various plain surface prestressed steel materials, and rare earth coated and zinc coated prestressed steel materials in the People's Republic of China. Ossen Innovation has a market cap of $19.3 million and is part of the energy industry. Shares are down 20.2% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Ossen Innovation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and compelling growth in net income. 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 OSN go as follows:

  • OSN's very impressive revenue growth greatly exceeded the industry average of 1.1%. Since the same quarter one year prior, revenues leaped by 92.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • This stock has managed to rise its share value by 95.82% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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 Metals & Mining industry and the overall market on the basis of return on equity, OSSEN INNOVATION CO LTD -ADR has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for OSSEN INNOVATION CO LTD -ADR is currently extremely low, coming in at 10.81%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.71% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to -$1.13 million or 112.47% 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: Ossen Innovation Ratings Report

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Sonde Resources ( SOQ) was another company that pushed the Basic Materials sector lower today. Sonde Resources was down $0.03 (15.8%) to $0.18 on heavy volume. Throughout the day, 191,506 shares of Sonde Resources exchanged hands as compared to its average daily volume of 34,400 shares. The stock ranged in price between $0.17-$0.21 after having opened the day at $0.21 as compared to the previous trading day's close of $0.22.

Sonde Resources has a market cap of $12.9 million and is part of the energy industry. Shares are down 68.8% year-to-date as of the close of trading on Monday.

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

Highlights from TheStreet Ratings analysis on SOQ go as follows:

You can view the full analysis from the report here: Sonde 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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