3 Stocks Improving Performance Of The Basic Materials Sector

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Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 25.94 points (-0.2%) at 17,111 as of Monday, Sept. 8, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,156 issues advancing vs. 1,888 declining with 146 unchanged.

The Basic Materials sector as a whole closed the day down 1.1% versus the S&P 500, which was down 0.3%. Top gainers within the Basic Materials sector included Mines Management ( MGN), up 1.7%, Lilis Energy ( LLEX), up 1.9%, Sutor Technology Group ( SUTR), up 4.7%, Houston American Energy ( HUSA), up 4.2% and Escalera Resources ( ESCR), up 2.1%.

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

Houston American Energy ( HUSA) is one of the companies that pushed the Basic Materials sector higher today. Houston American Energy was up $0.01 (4.2%) to $0.25 on light volume. Throughout the day, 146,521 shares of Houston American Energy exchanged hands as compared to its average daily volume of 210,300 shares. The stock ranged in a price between $0.24-$0.28 after having opened the day at $0.24 as compared to the previous trading day's close of $0.24.

Houston American Energy Corp., an independent energy company, explores for, develops, and produces natural gas, crude oil, and condensate from properties located principally in the Gulf Coast area of the United States and South America. Houston American Energy has a market cap of $12.5 million and is part of the chemicals industry. Shares are down 4.0% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Houston American Energy a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Houston American Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on HUSA go as follows:

  • Net operating cash flow has significantly decreased to -$0.42 million or 135.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • HUSA has underperformed the S&P 500 Index, declining 21.57% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, HOUSTON AMERN ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for HOUSTON AMERN ENERGY CORP is rather high; currently it is at 67.16%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -1020.89% is in-line with the industry average.
  • HUSA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 53.71, which clearly demonstrates the ability to cover short-term cash needs.

You can view the full analysis from the report here: Houston American Energy Ratings Report

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