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 up 0.2% versus the S&P 500, which was up 0.5%. Laggards within the Basic Materials sector included Pacific Booker Minerals ( PBM), down 2.4%, Entree Gold ( EGI), down 3.0%, Lilis Energy ( LLEX), down 9.3%, WSP Holdings ( WH), down 2.9% and Solitario Exploration & Royalty ( XPL), down 9.2%.

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

Solitario Exploration & Royalty ( XPL) is one of the companies that pushed the Basic Materials sector lower today. Solitario Exploration & Royalty was down $0.14 (9.2%) to $1.38 on heavy volume. Throughout the day, 72,777 shares of Solitario Exploration & Royalty exchanged hands as compared to its average daily volume of 29,200 shares. The stock ranged in price between $1.38-$1.52 after having opened the day at $1.45 as compared to the previous trading day's close of $1.52.

Solitario Exploration & Royalty Corp., a development stage company, acquires and explores for precious and base metal properties in Peru, Brazil, and Mexico. It primarily explores for gold, silver, platinum, palladium, copper, lead, and zinc metals. Solitario Exploration & Royalty has a market cap of $58.5 million and is part of the metals & mining industry. Shares are up 78.8% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Solitario Exploration & Royalty a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Solitario Exploration & Royalty as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from TheStreet Ratings analysis on XPL go as follows:

  • The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Metals & Mining industry and the overall market, SOLITARIO EXPLORATION & RLTY's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 46.3% when compared to the same quarter one year prior, rising from -$0.99 million to -$0.53 million.
  • SOLITARIO EXPLORATION & RLTY 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SOLITARIO EXPLORATION & RLTY continued to lose money by earning -$0.06 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 33.3% in earnings (-$0.08 versus -$0.06).
  • This stock has increased by 57.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in XPL do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

You can view the full analysis from the report here: Solitario Exploration & Royalty 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, WSP Holdings ( WH) was down $0.02 (2.9%) to $0.68 on light volume. Throughout the day, 10,900 shares of WSP Holdings exchanged hands as compared to its average daily volume of 56,300 shares. The stock ranged in price between $0.66-$0.70 after having opened the day at $0.69 as compared to the previous trading day's close of $0.70.

WSP Holdings Limited, together with its subsidiaries, manufactures and sells seamless oil country tubular goods. WSP Holdings has a market cap of $14.1 million and is part of the metals & mining industry. Shares are down 74.4% year-to-date as of the close of trading on Friday.

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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

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

Entree Gold ( EGI) was another company that pushed the Basic Materials sector lower today. Entree Gold was down $0.01 (3.0%) to $0.26 on light volume. Throughout the day, 9,272 shares of Entree Gold exchanged hands as compared to its average daily volume of 66,400 shares. The stock ranged in price between $0.26-$0.27 after having opened the day at $0.26 as compared to the previous trading day's close of $0.27.

Entree Gold has a market cap of $40.4 million and is part of the metals & mining industry. Shares are down 4.3% year-to-date as of the close of trading on Friday.

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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