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.

The Basic Materials sector as a whole closed the day down 1.1% versus the S&P 500, which was down 0.2%. Laggards within the Basic Materials sector included Alderon Iron Ore ( AXX), down 3.3%, Minco Gold ( MGH), down 12.4%, Ikonics ( IKNX), down 5.5%, Mines Management ( MGN), down 4.3% and China Gerui Advanced Materials Group ( CHOP), down 3.8%.

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 $0.03 (3.8%) to $0.83 on light volume. Throughout the day, 3,095 shares of China Gerui Advanced Materials Group exchanged hands as compared to its average daily volume of 20,300 shares. The stock ranged in price between $0.82-$0.83 after having opened the day at $0.82 as compared to the previous trading day's close of $0.86.

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 $5.1 million and is part of the energy industry. Shares are down 54.3% year-to-date as of the close of trading on Wednesday.

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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, weak operating cash flow and generally high debt management risk.

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 -$2.30 versus $4.50 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 655.5% when compared to the same quarter one year ago, falling from -$4.37 million to -$33.04 million.
  • 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, CHINA GERUI ADV MATERIALS GP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$9.97 million or 228.03% 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 92.74%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 700.00% compared to the year-earlier 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: China Gerui Advanced Materials Group Ratings Report

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At the close, Mines Management ( MGN) was down $0.02 (4.3%) to $0.50 on light volume. Throughout the day, 12,458 shares of Mines Management exchanged hands as compared to its average daily volume of 32,300 shares. The stock ranged in price between $0.50-$0.52 after having opened the day at $0.52 as compared to the previous trading day's close of $0.53.

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 $14.9 million and is part of the energy industry. Shares are up 12.3% year-to-date as of the close of trading on Wednesday.

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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, weak operating cash flow 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.
  • Net operating cash flow has declined marginally to -$1.52 million or 3.12% when compared to the same quarter last year. Despite a decrease in cash flow of 3.12%, MINES MANAGEMENT INC is still significantly exceeding the industry average of -56.70%.
  • MGN'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 57.63%, 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 revenue fell significantly faster than the industry average of 2.4%. Since the same quarter one year prior, revenues fell by 44.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • MINES MANAGEMENT INC has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, MINES MANAGEMENT INC continued to lose money by earning -$0.25 versus -$0.28 in the prior year.

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

Alderon Iron Ore ( AXX) was another company that pushed the Basic Materials sector lower today. Alderon Iron Ore was down $0.01 (3.3%) to $0.23 on light volume. Throughout the day, 10,800 shares of Alderon Iron Ore exchanged hands as compared to its average daily volume of 41,400 shares. The stock ranged in price between $0.23-$0.25 after having opened the day at $0.24 as compared to the previous trading day's close of $0.24.

Alderon Iron Ore has a market cap of $30.7 million and is part of the energy industry. Shares are down 29.0% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Alderon Iron Ore 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.

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