3 Chemicals Stocks Pushing Industry 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 traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 225 points (1.3%) at 17,417 as of Thursday, Jan. 29, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,093 issues advancing vs. 1,001 declining with 116 unchanged.

The Chemicals industry as a whole closed the day down 0.2% versus the S&P 500, which was up 1.0%. Top gainers within the Chemicals industry included Ceres ( CERE), up 2.5%, NL Industries ( NL), up 3.4%, China Green Agriculture ( CGA), up 3.5%, Oil-Dri Corp of America ( ODC), up 1.5% and Amyris ( AMRS), up 3.0%.

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

China Green Agriculture ( CGA) is one of the companies that pushed the Chemicals industry higher today. China Green Agriculture was up $0.06 (3.5%) to $1.75 on light volume. Throughout the day, 100,140 shares of China Green Agriculture exchanged hands as compared to its average daily volume of 150,100 shares. The stock ranged in a price between $1.69-$1.76 after having opened the day at $1.69 as compared to the previous trading day's close of $1.69.

China Green Agriculture, Inc., through its subsidiaries, engages in the research, development, production, distribution, and sale of various types of fertilizers and agricultural products primarily in the People's Republic of China. China Green Agriculture has a market cap of $53.6 million and is part of the basic materials sector. Shares are up 11.2% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate China Green Agriculture a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates China Green Agriculture as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on CGA go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CGA's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CGA has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for CHINA GREEN AGRICULTURE INC is rather high; currently it is at 50.86%. Regardless of CGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CGA's net profit margin of 15.78% compares favorably to 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 Chemicals industry. The net income has decreased by 21.9% when compared to the same quarter one year ago, dropping from $10.38 million to $8.10 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. In comparison to the other companies in the Chemicals industry and the overall market, CHINA GREEN AGRICULTURE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

You can view the full analysis from the report here: China Green Agriculture Ratings Report

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At the close, NL Industries ( NL) was up $0.23 (3.4%) to $7.09 on light volume. Throughout the day, 8,528 shares of NL Industries exchanged hands as compared to its average daily volume of 15,500 shares. The stock ranged in a price between $6.83-$7.11 after having opened the day at $6.83 as compared to the previous trading day's close of $6.86.

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in the United States and internationally. NL Industries has a market cap of $345.6 million and is part of the basic materials sector. Shares are down 20.2% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate NL Industries a buy, 1 analyst rates it a sell, and none rate it a hold.

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TheStreet Ratings rates NL Industries as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on NL go as follows:

  • The gross profit margin for NL INDUSTRIES is currently lower than what is desirable, coming in at 34.22%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 52.46% has significantly outperformed against the industry average.
  • NL'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 35.84%, 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 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 Commercial Services & Supplies industry and the overall market, NL INDUSTRIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • NL INDUSTRIES reported significant earnings per share improvement in the most recent quarter compared to 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, NL INDUSTRIES swung to a loss, reporting -$1.13 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus -$1.13).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 333.8% when compared to the same quarter one year prior, rising from -$5.94 million to $13.89 million.

You can view the full analysis from the report here: NL Industries 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.

Ceres ( CERE) was another company that pushed the Chemicals industry higher today. Ceres was up $0.00 (2.5%) to $0.20 on average volume. Throughout the day, 502,314 shares of Ceres exchanged hands as compared to its average daily volume of 478,600 shares. The stock ranged in a price between $0.18-$0.21 after having opened the day at $0.19 as compared to the previous trading day's close of $0.19.

Ceres, Inc., an agricultural biotechnology company, develops and sells energy crops to produce renewable bioenergy feedstocks in North America. Ceres has a market cap of $10.0 million and is part of the basic materials sector. Shares are down 13.8% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Ceres a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Ceres as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on CERE go as follows:

  • Net operating cash flow has decreased to -$6.29 million or 10.87% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CERES INC has marginally lower results.
  • CERE'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 85.54%, 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CERES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 6.7%. Since the same quarter one year prior, revenues fell by 47.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • CERE's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.14, which clearly demonstrates the ability to cover short-term cash needs.

You can view the full analysis from the report here: Ceres 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.