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 0.1% versus the S&P 500, which was up 0.3%. Laggards within the Basic Materials sector included Sonde Resources ( SOQ), down 9.5%, Lilis Energy ( LLEX), down 4.7%, Sutor Technology Group ( SUTR), down 3.0%, WSP Holdings ( WH), down 2.8% and Solitario Exploration & Royalty ( XPL), down 2.0%.

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 $0.02 (2.8%) to $0.69 on light volume. Throughout the day, 10,309 shares of WSP Holdings exchanged hands as compared to its average daily volume of 57,600 shares. The stock ranged in price between $0.69-$0.75 after having opened the day at $0.75 as compared to the previous trading day's close of $0.71.

WSP Holdings Limited, together with its subsidiaries, manufactures and sells seamless oil country tubular goods. WSP Holdings has a market cap of $15.7 million and is part of the metals & mining industry. Shares are down 74.0% year-to-date as of the close of trading on Wednesday.

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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, Sutor Technology Group ( SUTR) was down $0.02 (3.0%) to $0.73 on heavy volume. Throughout the day, 313,186 shares of Sutor Technology Group exchanged hands as compared to its average daily volume of 50,500 shares. The stock ranged in price between $0.71-$0.75 after having opened the day at $0.74 as compared to the previous trading day's close of $0.75.

Sutor Technology Group Limited, through its subsidiaries, manufactures and sells finished steel products in the People's Republic of China. Sutor Technology Group has a market cap of $35.4 million and is part of the metals & mining industry. Shares are down 58.9% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Sutor Technology Group as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on SUTR go as follows:

  • Net operating cash flow has significantly increased by 196.77% to $16.29 million when compared to the same quarter last year. In addition, SUTOR TECHNOLOGY GROUP LTD has also vastly surpassed the industry average cash flow growth rate of -23.48%.
  • 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, SUTOR TECHNOLOGY GROUP LTD 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 SUTOR TECHNOLOGY GROUP LTD is currently extremely low, coming in at 9.97%. Regardless of SUTR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SUTR's net profit margin of 1.15% is significantly lower than the industry average.
  • 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 Metals & Mining industry. The net income has significantly decreased by 71.3% when compared to the same quarter one year ago, falling from $3.88 million to $1.11 million.

You can view the full analysis from the report here: Sutor Technology Group Ratings Report

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Sonde Resources ( SOQ) was another company that pushed the Basic Materials sector lower today. Sonde Resources was down $0.02 (9.5%) to $0.19 on average volume. Throughout the day, 37,445 shares of Sonde Resources exchanged hands as compared to its average daily volume of 39,800 shares. The stock ranged in price between $0.19-$0.21 after having opened the day at $0.20 as compared to the previous trading day's close of $0.21.

Sonde Resources has a market cap of $13.5 million and is part of the metals & mining industry. Shares are down 65.2% year-to-date as of the close of trading on Wednesday.

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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