3 Stocks Driving The Chemicals Industry Higher

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.

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 Chemicals industry as a whole closed the day up 0.5% versus the S&P 500, which was down 0.1%. Top gainers within the Chemicals industry included Metabolix ( MBLX), up 6.7%, China Green Agriculture ( CGA), up 11.8%, Gevo ( GEVO), up 6.3%, Trecora Resources ( ARSD), up 1.8% and Trecora Resources ( TREC), up 1.8%.

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

Gevo ( GEVO) is one of the companies that pushed the Chemicals industry higher today. Gevo was up $0.03 (6.3%) to $0.55 on heavy volume. Throughout the day, 3,505,611 shares of Gevo exchanged hands as compared to its average daily volume of 686,800 shares. The stock ranged in a price between $0.51-$0.58 after having opened the day at $0.54 as compared to the previous trading day's close of $0.52.

Gevo, Inc., a renewable chemicals and biofuels company, focuses primarily on the production and sale of isobutanol and related products from renewable feedstocks. Gevo has a market cap of $36.1 million and is part of the basic materials sector. Shares are down 63.6% year-to-date as of the close of trading on Friday. Currently there are 2 analysts who rate Gevo a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Gevo as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on GEVO go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 12.7% when compared to the same quarter one year ago, dropping from -$15.22 million to -$17.16 million.
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, GEVO has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity 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 Oil, Gas & Consumable Fuels industry and the overall market, GEVO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$12.23 million or 20.16% 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.
  • GEVO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 76.22%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

You can view the full analysis from the report here: Gevo 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, China Green Agriculture ( CGA) was up $0.26 (11.8%) to $2.46 on heavy volume. Throughout the day, 855,667 shares of China Green Agriculture exchanged hands as compared to its average daily volume of 144,900 shares. The stock ranged in a price between $2.20-$2.54 after having opened the day at $2.21 as compared to the previous trading day's close of $2.20.

China Green Agriculture, Inc., through its subsidiaries, is engaged in the research, development, production, distribution, and sale of various types of fertilizers and agricultural products primarily in the People's Republic of China. China Green Agriculture has a market cap of $70.0 million and is part of the basic materials sector. Shares are down 39.2% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate China Green Agriculture 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 China Green Agriculture as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on CGA go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.7%. Since the same quarter one year prior, revenues slightly increased by 6.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CGA's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CGA has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 48.02% is the gross profit margin for CHINA GREEN AGRICULTURE INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.25% trails 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 Chemicals industry. The net income has significantly decreased by 46.2% when compared to the same quarter one year ago, falling from $13.41 million to $7.21 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Chemicals industry and the overall market, CHINA GREEN AGRICULTURE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

You can view the full analysis from the report here: China Green Agriculture 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.

Metabolix ( MBLX) was another company that pushed the Chemicals industry higher today. Metabolix was up $0.05 (6.7%) to $0.74 on heavy volume. Throughout the day, 214,873 shares of Metabolix exchanged hands as compared to its average daily volume of 94,600 shares. The stock ranged in a price between $0.70-$0.75 after having opened the day at $0.72 as compared to the previous trading day's close of $0.69.

Metabolix, Inc., a bioscience company, focuses on delivering sustainable solutions to the plastics and chemicals industries. It produces a family of biopolymers found in nature called polyhydroxyalkanoates, which occur naturally in living organisms and are chemically similar to polyesters. Metabolix has a market cap of $24.2 million and is part of the basic materials sector. Shares are down 45.2% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Metabolix a buy, no analysts rate it a sell, and 2 rate it a hold.

TheStreet Ratings rates Metabolix as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MBLX go as follows:

  • 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 Chemicals industry and the overall market, METABOLIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MBLX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.88%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The revenue fell significantly faster than the industry average of 7.7%. Since the same quarter one year prior, revenues fell by 31.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • METABOLIX INC has improved earnings per share by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, METABOLIX INC swung to a loss, reporting -$0.88 versus $0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.83 versus -$0.88).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Chemicals industry average. The net income increased by 8.0% when compared to the same quarter one year prior, going from -$7.87 million to -$7.24 million.

You can view the full analysis from the report here: Metabolix 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.

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.

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