3 Basic Materials Stocks Pushing Sector Growth

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Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 30.89 points (-0.2%) at 17,068 as of Tuesday, Sept. 2, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,485 issues advancing vs. 1,589 declining with 141 unchanged.

The Basic Materials sector as a whole closed the day down 0.9% versus the S&P 500, which was down 0.1%. Top gainers within the Basic Materials sector included Barnwell Industries ( BRN), up 1.7%, Ossen Innovation ( OSN), up 2.7%, Oxford Resource Partners ( OXF), up 1.9%, China Gerui Advanced Materials Group ( CHOP), up 9.6% and Tengasco ( TGC), up 2.4%.

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

China Gerui Advanced Materials Group ( CHOP) is one of the companies that pushed the Basic Materials sector higher today. China Gerui Advanced Materials Group was up $0.05 (9.6%) to $0.60 on average volume. Throughout the day, 62,570 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 64,400 shares. The stock ranged in a price between $0.55-$0.60 after having opened the day at $0.55 as compared to the previous trading day's close of $0.55.

China Gerui Advanced Materials Group Limited operates as a contract manufacturer of cold-rolled narrow strip steel products in the People's Republic of China and internationally. The company converts steel manufactured by third parties into thin steel sheets and strips. China Gerui Advanced Materials Group has a market cap of $32.6 million and is part of the energy industry. Shares are down 56.2% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate China Gerui Advanced Materials Group a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates China Gerui Advanced Materials Group 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, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on CHOP go as follows:

  • CHINA GERUI ADV MATERIALS GP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CHINA GERUI ADV MATERIALS GP swung to a loss, reporting -$0.23 versus $0.45 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 Metals & Mining industry. The net income has significantly decreased by 4304.2% when compared to the same quarter one year ago, falling from -$0.10 million to -$4.18 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, CHINA GERUI ADV MATERIALS GP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CHINA GERUI ADV MATERIALS GP is currently extremely low, coming in at 8.19%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.82% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $2.22 million or 43.77% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

You can view the full analysis from the report here: China Gerui Advanced Materials Group Ratings Report

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