3 Stocks Improving Performance Of The Basic Materials Sector

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 are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 28.32 points (-0.2%) at 17,043 as of Tuesday, Sept. 30, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,144 issues advancing vs. 1,950 declining with 113 unchanged.

The Basic Materials sector as a whole closed the day up 0.4% versus the S&P 500, which was down 0.3%. Top gainers within the Basic Materials sector included Atlatsa Resources ( ATL), up 4.3%, PostRock Energy ( PSTR), up 2.6%, Quest Rare Minerals ( QRM), up 5.4%, Pyramid Oil ( PDO), up 3.4% and Ikonics ( IKNX), up 2.2%.

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

Quest Rare Minerals ( QRM) is one of the companies that pushed the Basic Materials sector higher today. Quest Rare Minerals was up $0.01 (5.4%) to $0.16 on light volume. Throughout the day, 39,140 shares of Quest Rare Minerals exchanged hands as compared to its average daily volume of 216,400 shares. The stock ranged in a price between $0.14-$0.16 after having opened the day at $0.15 as compared to the previous trading day's close of $0.15.

Quest Rare Minerals has a market cap of $11.0 million and is part of the energy industry. Shares are down 70.2% year-to-date as of the close of trading on Monday.

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, PostRock Energy ( PSTR) was up $0.03 (2.6%) to $1.16 on light volume. Throughout the day, 12,020 shares of PostRock Energy exchanged hands as compared to its average daily volume of 27,700 shares. The stock ranged in a price between $1.10-$1.16 after having opened the day at $1.10 as compared to the previous trading day's close of $1.13.

PostRock Energy Corporation, an independent oil and gas company, is engaged in the acquisition, exploration, development, production, and gathering of crude oil and natural gas. PostRock Energy has a market cap of $34.2 million and is part of the energy industry. Shares are down 2.6% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate PostRock Energy 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 PostRock Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on PSTR go as follows:

  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 187.0% when compared to the same quarter one year ago, falling from $6.88 million to -$5.99 million.
  • Currently the debt-to-equity ratio of 1.62 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.43, which clearly demonstrates the inability to cover short-term cash needs.
  • The share price of POSTROCK ENERGY CORP has not done very well: it is down 9.02% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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, POSTROCK ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • POSTROCK ENERGY CORP 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. 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, POSTROCK ENERGY CORP continued to lose money by earning -$0.93 versus -$3.99 in the prior year. This year, the market expects an improvement in earnings (-$0.78 versus -$0.93).

You can view the full analysis from the report here: PostRock Energy 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.

Atlatsa Resources ( ATL) was another company that pushed the Basic Materials sector higher today. Atlatsa Resources was up $0.01 (4.3%) to $0.26 on light volume. Throughout the day, 17,990 shares of Atlatsa Resources exchanged hands as compared to its average daily volume of 45,300 shares. The stock ranged in a price between $0.24-$0.26 after having opened the day at $0.25 as compared to the previous trading day's close of $0.25.

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 $127.5 million and is part of the energy industry. Shares are down 60.0% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Atlatsa Resources a buy, no analysts rate it a sell, and none rate it a hold.

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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

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 0.6%. Since the same quarter one year prior, revenues rose by 20.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • ATL'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 27.50%, 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 gross profit margin for ATLATSA RESOURCES CORP is currently extremely low, coming in at 4.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.90% is significantly below that of 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.

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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