Wall Street is reeling under severe volatility in September after an astonishing bull run in the last five months. Although the recent downtrend of the stock market is broad-based, one sector, basic materials, has been able to withstand market turmoil in September so far. A handful of these stocks with a favorable Zacks Rank are trading in the green this month.
Basic Materials Sector Rebounds
The basic materials sector comprises companies involved in the discovery, development, and processing of raw materials used in manufacturing and construction including steel, aluminum, chemicals and forestry products. Consequently, these stocks are sensitive to business cycle and are likely to thrive when the economy is strong.
The Materials Select Sector SPDR (XLB), one of the 11 broad sectors of the benchmark S&P 500 Index, has gained 1% so far in September. All other sectors have lost in the said time frame. Notably, the S&P 500 Index itself has tumbled 5.2% month to date.
At its current level of 63.33, XLB is well above the 50-day and 200-day moving averages of 62.77 and 56.76, respectively. The 50-day and 200-day moving averages are important technical barriers providing short-term and long-term support levels. It is widely recognized in the technical analysis space that whenever the 50-day moving average line surges ahead of the 200-day moving average line, a long-term uptrend for the sector becomes a strong possibility.
On Sep 16, XLB recorded its all-time high of 67.14. It has gained 3.1% year to date while the benchmark S&P 500 itself rose just 2.6% in the said time frame. Notably, materials is the fourth-best performing sector of the S&P 500 Index after technology, consumer discretionary and communication services, year to date.
Our Top Picks
We have narrowed down our search to five basic materials stocks that have witnessed robust earnings estimate revisions for 2020 within the past 60 days and are in the positive territory so far in September. This indicates strong business potential for these companies for the rest of this year. Each of these picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy)stocks here.
The chart below shows the price performance of our five picks in September.
Kraton (NYSE:KRA) Corp. KRA manufactures and sells styrenic block copolymers, specialty polymers, and other products in the Americas, Europe, the Middle East, Africa and the Asia Pacific. It operates in two segments, Polymer and Chemical. The Zacks Consensus Estimate for the current year has improved more than 100% over the past 60 days. Stock price has soared 25.3% month to date.
Companhia Siderúrgica Nacional (NYSE:SID) SID operates as an integrated steel producer in Brazil and Latin America. The company operates in five segments: Steel, Mining, Cement, Logistics, and Energy. The Zacks Consensus Estimate for the current year has improved more than 100% over the past 60 days. The stock price has jumped 12.9% month to date.
Olympic Steel Inc. ZEUS processes and distributes metal products in the United States and internationally. It operates in three segments: Carbon Flat Products, Specialty Metals Flat Products;, and Tubular and Pipe Products. The Zacks Consensus Estimate for the current year has improved 51.2% over the past 60 days. The stock price has climbed 8.5% month to date.
Clearwater Paper (NYSE:CLW) Corp. CLW produces and sells private label tissue and bleached paperboard products in the United States and internationally. It operates through two segments, Consumer Products; and Pulp and Paperboard. The Zacks Consensus Estimate for the current year has improved 75.7% over the past 60 days. The stock has risen 4.2% month to date.
GrowGeneration (NASDAQ:GRWG) Corp. GRWG is a specialty retail hydroponic and organic gardening stores that carries and sells products which include organic nutrients and soils, advanced lighting technology and state-of-the-art hydroponic equipment to be used indoors and outdoors by commercial and home growers. The Zacks Consensus Estimate for the current year has improved 87.5% over the past 60 days. The stock price has advanced 2.9% month to date.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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National Steel Company (SID): Free Stock Analysis Report
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