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The basic materials sector has been the worst performer so far in 2012, the total return, year to date (11/30/2012) was only 2.1%, while the appreciation of the Russell 3000 index in the same period was 12.83%. Nevertheless, it is still possible to find promising candidates among the stocks in this sector.

Stock Sectors' Total Returns, Year to Date, are shown in the chart below:

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Source: finviz.com

I have searched for profitable companies with strong growth prospects in the basic materials sector, which pay very rich dividends. I also looked for companies that are in short-term uptrend, in mid-term uptrend and in long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.

I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

  1. Earnings growth estimates for the next 5 years (per annum) is greater than 15%.
  2. Dividend yield is greater than 5.0%.
  3. Stock price is above 20-day simple moving average (short-term uptrend).
  4. Stock price is above 50-day simple moving average (mid-term uptrend).
  5. Stock price is above 200-day simple moving average (long-term uptrend).

After running this screen on December 02, 2012, I obtained as results the five following stocks:

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Alumina Ltd. (AWC)

Alumina Limited, through its 40% equity interest in Alcoa World Alumina and Chemicals, engages in the bauxite mining, alumina refining, and aluminum smelting businesses. The company, formerly known as WMC Limited, was founded in 1970 and is based in Southbank, Australia.

Alumina Ltd. has a very low debt (total debt to equity is only 0.20) and the PEG ratio is at 1.60. The average annual earnings growth estimates for the next five years is very high at 35.10%. The forward annual dividend yield is very high at 6.12% and the payout ratio is 220%. The stock price is 9.27% above its 20-day simple moving average, 7.75% above its 50-day simple moving average and 0.91% above its 200-day simple moving average. The company is trading 34.01% below its 52-week high and has 23% upside potential based on the consensus mean target price of $4.81. The AWC stock is selling below its book value; price-to-book value is only 0.91. In my opinion, the AWC stock seems to be a good investment right now.

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Chart: finviz.com

Calumet Specialty Products Partners LP (NASDAQ:CLMT)

Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon products in North America. It operates in two segments, Specialty Products and Fuel Products.

Calumet Specialty Products has a very low trailing P/E of 9.41 and even a lower forward P/E of 8.39 and the PEG ratio is very low at 0.56. The price to free cash flow for the trailing 12 months is very low at 10.05 and the average annual earnings growth estimates for the next five years is quite high at 16.77%. The forward annual dividend yield is very high at 7.99% and the payout ratio is only 64%. The stock price is 1.45% above its 20-day simple moving average, 1.11% above its 50-day simple moving average and 20.70% above its 200-day simple moving average. On October 31, the company reported its 3Q financial results (here). On that occasion, Bill Grube, Calumet's Chief Executive Officer said:

Our third-quarter results were driven by strength in our fuel products segment and the addition of Royal Purple to our specialty products segment. We continued to benefit from widened crack spreads from Canadian heavy and Bakken crude oil differentials to NYMEX WTI in the third quarter. We are also pleased to add the Montana Refining employees and business to Calumet starting in the fourth quarter.

The very low multiples make the CLMT stock quite attractive and in addition, an annual yield of about 8% is a very nice income.

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Chart: finviz.com

Energy Transfer Equity, L.P. (NYSE:ETE)

Energy Transfer Equity, L.P. owns and operates a diversified portfolio of energy assets in the natural gas, natural gas liquids, and propane sectors in the United States.

Energy Transfer Equity has a forward P/E of 19.19 and the PEG ratio is at 1.28. The average annual earnings growth estimates for the next five years is quite high at 18.30%. The forward annual dividend yield is very high at 5.50% and the payout ratio is 132%. The stock price is 2.12% above its 20-day simple moving average, 2.17% above its 50-day simple moving average and 10.76% above its 200-day simple moving average. Analysts recommend the stock; among the 10 analysts covering the stock, three rate it as a strong buy, six rate it as a buy and only one rates it as a hold. On November 07, the company reported its 3Q financial results (here). Distributable Cash Flow, as adjusted, for Energy Transfer Equity, L.P. ("ETE" or the "Partnership") was $189.2 million for the three months ended September 30, 2012, an increase of $62.9 million over the three months ended September 30, 2011. Distributable Cash Flow, as adjusted, for ETE was $476.1 million for the nine months ended September 30, 2012, an increase of $100.0 million over the nine months ended September 30, 2011. ETE stock looks quite attractive.

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Chart: finviz.com

Energy Transfer Partners LP (NYSE:ETP)

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States.

Energy Transfer Partners has a very low trailing P/E of 8.54 and a very low PEG ratio of 0.56. The average annual earnings growth estimates for the next five years is quite high at 15.23%. The forward annual dividend yield is very high at 8.15% and the payout ratio is 72.3%. The stock price is 3.71% above its 20-day simple moving average, 4.54% above its 50-day simple moving average and 1.83% above its 200-day simple moving average. On November 07, the company reported its 3Q financial results (here). Adjusted EBITDA for Energy Transfer Partners, L.P. ("ETP" or the "Partnership") for the three months ended September 30, 2012, totaled $481.7 million, an increase of $77.5 million over the three months ended September 30, 2011. Adjusted EBITDA for ETP for the nine months ended September 30, 2012, totaled $1.48 billion, an increase of $220.5 million over the nine months ended September 30, 2011. The very low multiples and the very high dividend yield make the ETP stock quite attractive.

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Chart: finviz.com

Genesis Energy LP (NYSE:GEL)

Genesis Energy, L.P. operates in the midstream segment of the oil and gas industry in the Gulf Coast region of the United States.

Genesis Energy has a forward P/E of 23.60 and the PEG ratio is at 1.81. The average annual earnings growth estimates for the next five years is quite high at 19.60%. The forward annual dividend yield is very high at 5.27% and the payout ratio is 184%. The stock price is 7.24% above its 20-day simple moving average, 8.28% above its 50-day simple moving average and 17.54% above its 200-day simple moving average. Analysts recommend the stock; among the 12 analysts covering the stock, five rate it as a strong buy, five rate it as a buy and only two rate it as a hold. On November 06, the company reported its 3Q financial results (here). For the third quarter of 2012, the company generated a record total Available Cash before Reserves of $45.9 million, an increase of $8.8 million, or 23.8%, over the third quarter of 2011. All these factors make the GEL stock quite attractive.

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Chart: finviz.com

Source: 5 Basic Materials High-Yield Dividend Growth Stocks In Uptrend