Most people recognize that you need a solid foundation before you can build. Otherwise, things tend to fall apart. With that in mind, we searched for basic materials companies that appear to have solid fundamentals. Today we focused on debt ratios to serve as indicators of sound capital structures. When a company has kept debt to a minimum, they demonstrate that are able to maintain steady growth without relying on lines of credit. We further reduced the list to include those that are projected to grow significantly over the next five years. Take a look at the basic materials stocks we gathered to see if any spark your interest.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The five-year expected EPS growth rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
The debt/equity ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
We first looked for basic materials stocks. We then looked for companies with projected high growth, measured by five-year projected EPS growth above 25%. We then screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). We did not screen out any market caps.
Do you think these stocks have strong fundamentals? Use our list to help with your own analysis.
1) Rubicon Minerals Corporation (RBY)
|5-Year Projected Earnings Per Share Growth Rate||63.00%|
Rubicon Minerals Corporation, a mineral exploration company, engages in the acquisition, exploration, and development of gold and base-metal properties in Canada and the United States. The company primarily focuses on the Phoenix Gold Project located in Ontario, Canada. It controls approximately 65,000 acres of exploration ground in the Red Lake gold camp, in the province of Ontario. The company also holds 225,000 acre land package in Elko County, northeastern Nevada; and 608 acres in Box Elder County, northwestern Utah, as well as 513,000 acre land package in Alaska. Rubicon Minerals Corporation was founded in 1996 and is headquartered in Vancouver, Canada.
2) Enduro Royalty Trust (NDRO)
|Industry||Independent Oil & Gas|
|5-Year Projected Earnings Per Share Growth Rate||71.70%|
Enduro Royalty Trust focuses on acquiring and owning a net profits interest representing the right to receive an 80% of the net profits from the sale of oil and natural gas production from certain properties located in the states of Texas, Louisiana, and New Mexico held by Enduro Resource Partners LLC. The company was founded in 2011 and is based in Austin, Texas. Enduro Royalty Trust is a subsidiary of Enduro Resource Partners LLC.
3) Silver Wheaton Corp. (SLW)
|5-Year Projected Earnings Per Share Growth Rate||36.50%|
Silver Wheaton Corp., a mining company, together with its subsidiaries, operates as a silver streaming company worldwide. The company has 14 long-term silver purchase agreements and 2 long-term precious metal purchase agreements whereby it acquires silver and gold production from the counterparties located in Mexico, the United States, Greece, Sweden, Per, Chile, Argentina, and Portugal. Silver Wheaton Corp. is headquartered in Vancouver, Canada.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/30/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.