3 Basic Materials Stocks Driving The Sector Higher

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.

Two out of the three major indices traded up today One out of the three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 38 points (0.2%) at 17,650 as of Thursday, Nov. 13, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 998 issues advancing vs. 2,012 declining with 159 unchanged.

The Basic Materials sector as a whole closed the day down 2.2% versus the S&P 500, which was unchanged. Top gainers within the Basic Materials sector included Atlatsa Resources ( ATL), up 2.7%, Timberline Resources ( TLR), up 2.1%, China Gerui Advanced Materials Group ( CHOP), up 2.4%, Mines Management ( MGN), up 1.6% and Eurasian Minerals ( EMXX), up 2.0%.

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

China Gerui Advanced Materials Group ( CHOP) is one of the companies that pushed the Basic Materials sector higher today. China Gerui Advanced Materials Group was up $0.04 (2.4%) to $1.74 on heavy volume. Throughout the day, 26,755 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 10,300 shares. The stock ranged in a price between $1.65-$1.78 after having opened the day at $1.70 as compared to the previous trading day's close of $1.70.

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 $10.8 million and is part of the energy industry. Shares are down 85.4% year-to-date as of the close of trading on Wednesday. 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.

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 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, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

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.
  • 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 85.42%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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.

At the close, Timberline Resources ( TLR) was up $0.01 (2.1%) to $0.61 on average volume. Throughout the day, 24,536 shares of Timberline Resources exchanged hands as compared to its average daily volume of 26,500 shares. The stock ranged in a price between $0.52-$0.62 after having opened the day at $0.52 as compared to the previous trading day's close of $0.60.

Timberline Resources has a market cap of $3.4 million and is part of the energy industry. Shares are down 71.6% year-to-date as of the close of trading on Wednesday.

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 $0.00 (2.7%) to $0.19 on light volume. Throughout the day, 8,192 shares of Atlatsa Resources exchanged hands as compared to its average daily volume of 33,300 shares. The stock ranged in a price between $0.18-$0.20 after having opened the day at $0.19 as compared to the previous trading day's close of $0.18.

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 $101.3 million and is part of the energy industry. Shares are down 68.2% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate Atlatsa Resources a buy, 1 analyst rates 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 0.8%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.83 is weak.
  • 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 48.72%, 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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