3 Stocks Pushing The Basic Materials Sector Lower

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.

The Basic Materials sector as a whole closed the day up 0.4% versus the S&P 500, which was down 0.3%. Laggards within the Basic Materials sector included Barnwell Industries ( BRN), down 2.8%, Timberline Resources ( TLR), down 5.7%, Ossen Innovation ( OSN), down 14.5%, China Gerui Advanced Materials Group ( CHOP), down 2.7% and Solitario Exploration & Royalty ( XPL), down 3.2%.

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 $0.01 (2.7%) to $0.32 on light volume. Throughout the day, 64,547 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 88,000 shares. The stock ranged in price between $0.30-$0.34 after having opened the day at $0.32 as compared to the previous trading day's close of $0.33.

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 $17.5 million and is part of the energy industry. Shares are down 73.7% year-to-date as of the close of trading on Monday.

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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 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 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 61.9% when compared to the same quarter one year ago, falling from -$0.85 million to -$1.37 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 14.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.18% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$228.80 million or 766.69% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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, Ossen Innovation ( OSN) was down $0.20 (14.5%) to $1.18 on heavy volume. Throughout the day, 174,067 shares of Ossen Innovation exchanged hands as compared to its average daily volume of 20,600 shares. The stock ranged in price between $1.17-$1.39 after having opened the day at $1.39 as compared to the previous trading day's close of $1.38.

Ossen Innovation Co., Ltd. manufactures and sells various plain surface prestressed steel materials, and rare earth coated and zinc coated prestressed steel materials in the People's Republic of China. Ossen Innovation has a market cap of $18.1 million and is part of the energy industry. Shares are up 16.0% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Ossen Innovation as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and attractive valuation levels. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on OSN go as follows:

  • The revenue growth greatly exceeded the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 48.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 75.00% and other important driving factors, this stock has surged by 40.00% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, OSSEN INNOVATION CO LTD -ADR has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 111.2% when compared to the same quarter one year prior, rising from $0.70 million to $1.49 million.
  • The gross profit margin for OSSEN INNOVATION CO LTD -ADR is currently extremely low, coming in at 11.44%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.13% trails that of the industry average.

You can view the full analysis from the report here: Ossen Innovation Ratings Report

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Timberline Resources ( TLR) was another company that pushed the Basic Materials sector lower today. Timberline Resources was down $0.00 (5.7%) to $0.08 on light volume. Throughout the day, 58,419 shares of Timberline Resources exchanged hands as compared to its average daily volume of 180,400 shares. The stock ranged in price between $0.07-$0.08 after having opened the day at $0.08 as compared to the previous trading day's close of $0.08.

Timberline Resources has a market cap of $5.3 million and is part of the energy industry. Shares are down 54.6% 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.

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