3 Basic Materials Stocks Pushing Sector Growth

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 31.44 points (-0.2%) at 16,974 as of Wednesday, Oct. 29, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,337 issues advancing vs. 1,766 declining with 127 unchanged.

The Basic Materials sector as a whole closed the day down 0.5% versus the S&P 500, which was down 0.1%. Top gainers within the Basic Materials sector included Pacific Booker Minerals ( PBM), up 3.9%, China Gerui Advanced Materials Group ( CHOP), up 16.1%, Mines Management ( MGN), up 3.9%, Sutor Technology Group ( SUTR), up 2.1% and Tengasco ( TGC), up 1.7%.

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

Sutor Technology Group ( SUTR) is one of the companies that pushed the Basic Materials sector higher today. Sutor Technology Group was up $0.01 (2.1%) to $0.41 on light volume. Throughout the day, 61,646 shares of Sutor Technology Group exchanged hands as compared to its average daily volume of 87,500 shares. The stock ranged in a price between $0.40-$0.43 after having opened the day at $0.40 as compared to the previous trading day's close of $0.40.

Sutor Technology Group Limited, through its subsidiaries, manufactures and sells finished steel products in the People's Republic of China. Sutor Technology Group has a market cap of $17.5 million and is part of the energy industry. Shares are down 78.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Sutor Technology Group a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Sutor Technology Group as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on SUTR go as follows:

  • Net operating cash flow has significantly increased by 196.77% to $16.29 million when compared to the same quarter last year. In addition, SUTOR TECHNOLOGY GROUP LTD has also vastly surpassed the industry average cash flow growth rate of -12.26%.
  • 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, SUTOR TECHNOLOGY GROUP LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for SUTOR TECHNOLOGY GROUP LTD is currently extremely low, coming in at 9.97%. Regardless of SUTR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SUTR's net profit margin of 1.15% is significantly lower than 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 Metals & Mining industry. The net income has significantly decreased by 71.3% when compared to the same quarter one year ago, falling from $3.88 million to $1.11 million.

You can view the full analysis from the report here: Sutor Technology Group Ratings Report

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At the close, Mines Management ( MGN) was up $0.02 (3.9%) to $0.56 on heavy volume. Throughout the day, 73,877 shares of Mines Management exchanged hands as compared to its average daily volume of 41,300 shares. The stock ranged in a price between $0.51-$0.56 after having opened the day at $0.52 as compared to the previous trading day's close of $0.54.

Mines Management, Inc., together with its subsidiaries, acquires, explores, and develops various mineral properties in North and South America. The company explores for silver, and associated base and precious metals. Mines Management has a market cap of $15.4 million and is part of the energy industry. Shares are down 10.2% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Mines Management a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Mines Management 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 MGN 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 Metals & Mining industry and the overall market, MINES MANAGEMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MGN has underperformed the S&P 500 Index, declining 17.47% 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, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Metals & Mining industry average. The net income increased by 0.8% when compared to the same quarter one year prior, going from -$1.84 million to -$1.82 million.
  • MINES MANAGEMENT INC reported flat earnings per share in the most recent quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, MINES MANAGEMENT INC continued to lose money by earning -$0.25 versus -$0.28 in the prior year.
  • Net operating cash flow has increased to -$1.42 million or 17.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.26%.

You can view the full analysis from the report here: Mines Management Ratings Report

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China Gerui Advanced Materials Group ( CHOP) was another company that pushed the Basic Materials sector higher today. China Gerui Advanced Materials Group was up $0.04 (16.1%) to $0.30 on heavy volume. Throughout the day, 167,132 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 81,900 shares. The stock ranged in a price between $0.25-$0.33 after having opened the day at $0.25 as compared to the previous trading day's close of $0.26.

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 $15.6 million and is part of the energy industry. Shares are down 79.6% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate China Gerui Advanced Materials Group a buy, no analysts rate it a sell, and none rate it a hold.

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

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.