When it comes to the basic materials sector, the conversation in 2013 has been heavily focused on oil & gas companies and how well they are doing vis-a-vis the “shale boom.” In terms of hard commodities, the consensus seems to be significantly more bearish, with fears of slower growth from emerging markets, oversupply of previously sought after materials such as iron ore and copper, and the devastating bear market for precious metals, most notably gold, though it is not the only one of its kind.
Looking at the sector’s small-caps, however, points to some interesting and perhaps unexpected options for stock-pickers looking for growth in the materials space. The following four NASDAQ-listed companies, none of which hail from the oil & gas industry it should be noted, have been selected based on a simple set of criteria including market-cap (small), high volume trading in the previous session (as measured by a relative volume ratio of greater than 1.5), and positive year-to-date performance. Furthermore, the each of these stocks has an average analyst rating of “buy or better”.
Landec Corp. (LNDC)
Industry: Major Diversified Chemicals
Market-Cap: $301.55 million
Price: $11.25
Average Volume: 179,820
Relative Volume Ratio: 2.12
Performance Year-To-Date: +19.87 percent
The Menlo Park, CA-based company specialized in the manufacture of polymer products for food and biomedical materials markets. Landec also has a smaller portion of its business devoted to personal care products.
Insteel Industries Inc. (IIIN)
Industry: Steel & Iron
Market-Cap: 316.84 million
Price: $17.61
Average Volume: 43,510
Relative Volume Ratio: 2.78
Performance Year-To-Date: +40.61 percent
The Mount Airy, NC-based company manufactures and markets steel wire reinforcing products for concrete construction applications
Aceto Corp. (ACET)
Industry: Major Diversified Chemicals
Market-Cap: $565.41 million
Price: $21.29
Average Volume: 240,560
Relative Volume Ratio: 1.65
Performance Year-To-Date: +105.34 percent
The Port Washington, NY-based company is divided between three segments: human health, pharmaceutical ingredients, and performance chemicals, and has by far had the best run in 2013 of any company on this list.
Innophos Holdings (IPHS)
Industry: Specialty Chemicals
Market-Cap: $1.04 billion
Price: $47.47
Average Volume: 83,830
Relative Volume Ratio: 2.01
Performance Year-To-Date: +4.45 percent
The Cranbury, NJ-based company produces mineral-based specialty ingredients for food, beverage, dietary supplements, pharmaceutical applications, oral care, and industrial end-markets.
