3 Basic Materials Stocks Pushing Sector Growth

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 19 points (0.1%) at 17,098 as of Friday, Aug. 29, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,137 issues advancing vs. 890 declining with 157 unchanged.

The Basic Materials sector as a whole closed the day up 0.9% versus the S&P 500, which was up 0.3%. Top gainers within the Basic Materials sector included Sonde Resources ( SOQ), up 4.6%, Pacific Booker Minerals ( PBM), up 5.1%, Atlatsa Resources ( ATL), up 2.9%, WSP Holdings ( WH), up 5.9% and Eurasian Minerals ( EMXX), up 2.7%.

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

WSP Holdings ( WH) is one of the companies that pushed the Basic Materials sector higher today. WSP Holdings was up $0.04 (5.9%) to $0.72 on light volume. Throughout the day, 6,540 shares of WSP Holdings exchanged hands as compared to its average daily volume of 50,200 shares. The stock ranged in a price between $0.70-$0.72 after having opened the day at $0.70 as compared to the previous trading day's close of $0.68.

WSP Holdings Limited, together with its subsidiaries, manufactures and sells seamless oil country tubular goods. WSP Holdings has a market cap of $13.9 million and is part of the energy industry. Shares are down 75.1% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate WSP Holdings a buy, no analysts rate it a sell, and none rate 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 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.

At the close, Atlatsa Resources ( ATL) was up $0.01 (2.9%) to $0.35 on light volume. Throughout the day, 1,270 shares of Atlatsa Resources exchanged hands as compared to its average daily volume of 47,800 shares. The stock ranged in a price between $0.34-$0.35 after having opened the day at $0.34 as compared to the previous trading day's close of $0.34.

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 $190.0 million and is part of the energy industry. Shares are down 40.9% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates Atlatsa Resources a buy, no analysts rate it a sell, and none rate 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 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 4.0%. 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 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 of 1.47%, ATLATSA RESOURCES CORP is in line with the industry average cash flow growth rate of -8.77%.
  • 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

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

Sonde Resources ( SOQ) was another company that pushed the Basic Materials sector higher today. Sonde Resources was up $0.01 (4.6%) to $0.20 on light volume. Throughout the day, 14,055 shares of Sonde Resources exchanged hands as compared to its average daily volume of 38,100 shares. The stock ranged in a price between $0.17-$0.20 after having opened the day at $0.18 as compared to the previous trading day's close of $0.19.

Sonde Resources has a market cap of $10.7 million and is part of the energy industry. Shares are down 72.5% year-to-date as of the close of trading on Thursday.

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.

More from Markets

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers