3 Chemicals Stocks Nudging The Industry Higher

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 242 points (1.4%) at 17,615 as of Monday, Aug. 10, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,351 issues advancing vs. 737 declining with 111 unchanged.

The Chemicals industry as a whole closed the day up 2.2% versus the S&P 500, which was up 1.3%. Top gainers within the Chemicals industry included Delta Technology Holdings ( DELT), up 8.7%, Ikonics ( IKNX), up 1.7%, Metabolix ( MBLX), up 2.9%, Flexible Solutions International ( FSI), up 4.8% and Gulf Resources ( GURE), up 2.6%.

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

Gulf Resources ( GURE) is one of the companies that pushed the Chemicals industry higher today. Gulf Resources was up $0.05 (2.6%) to $2.00 on heavy volume. Throughout the day, 163,292 shares of Gulf Resources exchanged hands as compared to its average daily volume of 102,800 shares. The stock ranged in a price between $2.00-$2.12 after having opened the day at $2.07 as compared to the previous trading day's close of $1.95.

Gulf Resources, Inc., through its subsidiaries, manufactures and trades in bromine, crude salt, and specialty chemical products in the People's Republic of China. It operates in three segments: Bromine, Crude Salt, and Chemical Products. Gulf Resources has a market cap of $89.1 million and is part of the basic materials sector. Shares are up 68.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Gulf Resources a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Gulf Resources as a buy. 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, attractive valuation levels, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on GURE go as follows:

  • The revenue growth greatly exceeded the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 36.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GURE's debt-to-equity ratio is very low at 0.01 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 7.85, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 24.0% when compared to the same quarter one year prior, going from $4.29 million to $5.32 million.
  • Net operating cash flow has increased to $17.78 million or 38.68% when compared to the same quarter last year. In addition, GULF RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of -16.05%.

You can view the full analysis from the report here: Gulf Resources Ratings Report

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At the close, Flexible Solutions International ( FSI) was up $0.05 (4.8%) to $1.08 on light volume. Throughout the day, 77,431 shares of Flexible Solutions International exchanged hands as compared to its average daily volume of 182,000 shares. The stock ranged in a price between $1.01-$1.12 after having opened the day at $1.03 as compared to the previous trading day's close of $1.03.

Flexible Solutions International, Inc., together with its subsidiaries, develops, manufactures, and markets specialty chemicals that slow the evaporation of water. Flexible Solutions International has a market cap of $13.8 million and is part of the basic materials sector. Shares are down 9.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Flexible Solutions International a buy, 1 analyst rates it a sell, and none rate it a hold.

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TheStreet Ratings rates Flexible Solutions International 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 disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on FSI go as follows:

  • The revenue growth greatly exceeded the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 30.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FSI's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FSI has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • FLEXIBLE SOLUTIONS INTL INC 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, FLEXIBLE SOLUTIONS INTL INC reported lower earnings of $0.03 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.10 versus $0.03).
  • FSI has underperformed the S&P 500 Index, declining 11.02% 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.
  • 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, FLEXIBLE SOLUTIONS INTL 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: Flexible Solutions International Ratings Report

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Metabolix ( MBLX) was another company that pushed the Chemicals industry higher today. Metabolix was up $0.09 (2.9%) to $3.15 on light volume. Throughout the day, 8,519 shares of Metabolix exchanged hands as compared to its average daily volume of 19,200 shares. The stock ranged in a price between $3.04-$3.34 after having opened the day at $3.04 as compared to the previous trading day's close of $3.06.

Metabolix, Inc., an advanced biomaterials company, focuses on delivering sustainable solutions to the plastics industry. The company develops and commercializes technologies for the production of polymers and chemicals in microbes and plants. Metabolix has a market cap of $68.9 million and is part of the basic materials sector. Shares are up 23.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Metabolix a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Metabolix as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MBLX go as follows:

  • MBLX has underperformed the S&P 500 Index, declining 7.58% 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's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Chemicals industry and the overall market, METABOLIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$6.66 million or 25.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.05%.
  • MBLX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.41, which clearly demonstrates the ability to cover short-term cash needs.
  • METABOLIX INC reported significant earnings per share improvement 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, METABOLIX INC continued to lose money by earning -$3.48 versus -$5.34 in the prior year. This year, the market expects an improvement in earnings (-$0.96 versus -$3.48).

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

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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.

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