3 Materials & Construction Stocks Nudging The Industry 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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 323 points (1.8%) at 17,908 as of Thursday, Jan. 8, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,416 issues advancing vs. 715 declining with 85 unchanged.

The Materials & Construction industry as a whole closed the day up 1.8% versus the S&P 500, which was up 1.8%. Top gainers within the Materials & Construction industry included Pure Cycle ( PCYO), up 13.0%, Real Goods Solar ( RGSE), up 10.5%, Goldfield ( GV), up 2.2%, New Home Company ( NWHM), up 1.5% and Casella Waste Systems ( CWST), up 3.1%.

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

New Home Company ( NWHM) is one of the companies that pushed the Materials & Construction industry higher today. New Home Company was up $0.22 (1.5%) to $14.68 on average volume. Throughout the day, 35,851 shares of New Home Company exchanged hands as compared to its average daily volume of 36,000 shares. The stock ranged in a price between $14.36-$14.85 after having opened the day at $14.53 as compared to the previous trading day's close of $14.46.

New Home Company has a market cap of $233.4 million and is part of the industrial goods sector. Shares are down 0.1% 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.

At the close, Real Goods Solar ( RGSE) was up $0.06 (10.5%) to $0.58 on light volume. Throughout the day, 254,358 shares of Real Goods Solar exchanged hands as compared to its average daily volume of 457,200 shares. The stock ranged in a price between $0.50-$0.58 after having opened the day at $0.53 as compared to the previous trading day's close of $0.52.

Real Goods Solar, Inc. operates as a residential and commercial solar energy engineering, procurement, and construction company in the United States. It provides commercial and residential solar energy solutions. Real Goods Solar has a market cap of $27.7 million and is part of the industrial goods sector. Shares are up 8.4% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate Real Goods Solar a buy, no analysts rate it a sell, and 2 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 Real Goods Solar as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RGSE 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 Electrical Equipment industry. The net income has significantly decreased by 126.8% when compared to the same quarter one year ago, falling from -$2.09 million to -$4.75 million.
  • The gross profit margin for REAL GOODS SOLAR INC is rather low; currently it is at 16.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -25.13% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$6.64 million or 102.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • RGSE's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.38 is very low and demonstrates very weak liquidity.
  • RGSE'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 76.21%, 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.

You can view the full analysis from the report here: Real Goods Solar 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.

Pure Cycle ( PCYO) was another company that pushed the Materials & Construction industry higher today. Pure Cycle was up $0.46 (13.0%) to $4.00 on average volume. Throughout the day, 83,194 shares of Pure Cycle exchanged hands as compared to its average daily volume of 56,200 shares. The stock ranged in a price between $3.69-$4.00 after having opened the day at $3.70 as compared to the previous trading day's close of $3.54.

Pure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area, the United States. Pure Cycle has a market cap of $88.9 million and is part of the industrial goods sector. Shares are down 11.5% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Pure Cycle a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Pure Cycle as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on PCYO go as follows:

  • PCYO's very impressive revenue growth greatly exceeded the industry average of 8.6%. Since the same quarter one year prior, revenues leaped by 92.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PCYO's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for PURE CYCLE CORP is currently very high, coming in at 74.32%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PCYO's net profit margin of 125.04% significantly outperformed against the industry.
  • PCYO'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 25.45%, 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.
  • Net operating cash flow has significantly decreased to -$0.66 million or 53.13% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

You can view the full analysis from the report here: Pure Cycle 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.

More from Markets

Podcast: What TheStreet's Interns Learned From Jim Cramer and Action Alerts PLUS

Podcast: What TheStreet's Interns Learned From Jim Cramer and Action Alerts PLUS

Bank of America, Tariffs and the Goldman Sachs CEO Change: Jim Cramer Rewind

Bank of America, Tariffs and the Goldman Sachs CEO Change: Jim Cramer Rewind

Here's Why Alphabet, Facebook and Amazon Earnings May Overshadow Tariff Worries

Here's Why Alphabet, Facebook and Amazon Earnings May Overshadow Tariff Worries

NYSE Trader Expects Blowout Earnings From Alphabet, Amazon and Facebook

NYSE Trader Expects Blowout Earnings From Alphabet, Amazon and Facebook

Don't Panic! The Risk of a Recession This Year Is Low

Don't Panic! The Risk of a Recession This Year Is Low