3 Stocks Pushing The Basic Materials Sector Lower

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The Basic Materials sector as a whole closed the day down 1.4% versus the S&P 500, which was down 0.2%. Laggards within the Basic Materials sector included Entree Gold ( EGI), down 3.0%, WSP Holdings ( WH), down 6.6%, Minco Gold ( MGH), down 5.1%, China Gerui Advanced Materials Group ( CHOP), down 20.5% and Mines Management ( MGN), down 5.9%.

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

China Gerui Advanced Materials Group ( CHOP) is one of the companies that pushed the Basic Materials sector lower today. China Gerui Advanced Materials Group was down $0.12 (20.5%) to $0.48 on heavy volume. Throughout the day, 671,006 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 62,800 shares. The stock ranged in price between $0.44-$0.54 after having opened the day at $0.53 as compared to the previous trading day's close of $0.61.

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 $35.7 million and is part of the energy industry. Shares are down 51.2% year-to-date as of the close of trading on Wednesday.

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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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At the close, WSP Holdings ( WH) was down $0.05 (6.6%) to $0.65 on light volume. Throughout the day, 4,099 shares of WSP Holdings exchanged hands as compared to its average daily volume of 35,200 shares. The stock ranged in price between $0.65-$0.69 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 $13.5 million and is part of the energy industry. Shares are down 74.4% 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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Entree Gold ( EGI) was another company that pushed the Basic Materials sector lower today. Entree Gold was down $0.01 (3.0%) to $0.27 on average volume. Throughout the day, 54,055 shares of Entree Gold exchanged hands as compared to its average daily volume of 69,600 shares. The stock ranged in price between $0.26-$0.30 after having opened the day at $0.28 as compared to the previous trading day's close of $0.28.

Entree Gold has a market cap of $39.7 million and is part of the energy industry. Shares are down 0.6% year-to-date as of the close of trading on Wednesday.

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