4 Materials Stocks That are Bucking the Trend of the Market

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  • The S&P 500 continued its uncertain ways last week as technology shares struggled to find any footing. While the bearishness was the story of the week for most of the market, that wasn’t true for all of the market. Thursday and Friday saw buyers in the materials space perk up and was the only S&P 500 sector to finish in the green for the week. By Friday, it was the Construction Materials along with Metals and Mining that shined.

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  • For the week, the S&P 500 finished 2.51% lower while the Materials SPDR Select Sector ETF (NYSEARCA: XLB) finished 0.1% higher on the week. It was the only S&P 500 sector that had a higher weekly closing price. This is unusual since materials tend to be more cyclical and will frequently be a loss leader in a down week for the S&P 500.

    Within the Materials sector, it was Non-Energy Mineerals that led the way in the industry group category with a 2.38% weekly gain. Much of the movement came on Friday as the industry group broke out.

    Within Non-Energy Minerals, Construction Materials was the strongest industry with a 3.45% weekly gain. It was followed by Other Metals/Minerals with a 3.03% weekly gain. Without consideration for sector and industry group performance, these industries were both in the top seven for weekly performance.

    Looking back at the price history of the Materials Sector, it is trading at a new all-time high closing weekly price last week. This is a significant development and it’s not all tied to precious metals stocks.

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  • Here are four of the top performing companies from last week that are showing significant breakout and strong potential in the near term.

    Materials Outperformer #1: Forterra Inc (NASDAQ: FRTA)

    Forterra manufactures and sells precast concrete pipe and other products used for water and drains. Their products are used for residential and nonresidential site developments, sanitary sewers, utility tunnels, etc.

    In the last earnings release, the company beat analyst estimates by 100% with a quarterly EPS of $0.40. The earnings beat and guidance caused substantial positive revisions to their upcoming quarterly and annual EPS.

    The company was the second-best performing stock in the Construction Materials industry with a 13.84% weekly gain. The share price broke resistance and closed at the highest price since May 2017. The $15.50 level of resistance was also the 61.8% Fibonacci retracement level of the 2017 downtrend. The indication provided by the breakout is a retest of the 2017 high near $22.75.

    Materials Outperformer #2: Summit Materials Inc (NYSE: SUM)

    Summit Materials produces aggregates, cement. Ready-mix concrete, asphalt paving mixes and concrete products used for public infrastructure, residential, nonresidential construction. They also have municipal waste, construction, and demolition landfills.

    In the last earnings report, the company beat analyst estimates by 100% with a quarterly EPS of $0.50. The company has had several significant positive revisions to their upcoming quarterly and fiscal year EPS in the past 60 days.

    The company was the third-best performing stock in the industry with a weekly gain of 12.33%. The share price of SUM bounced off its $14.50 support last week and is looking to test the $18.50 resistance. A break of the level is an indication that the price will retest the 52-week high near $25.50.

    Materials Outperformer #3: Teck Resources Ltd (NYSE: TECK)

    Teck Resources is a natural resource exploration company that operates in the Asia Pacific, Americas and Europe. Their principle products are steelmaking coal, copper, zinc, and other energy products and precious metals.

    The company missed analyst estimates in their most recent earnings report on July 22 but raised guidance. The company has seen significant positive revisions to their quarterly and annual EPS. For example, the current fiscal year has been raised from $2.55 to $3.50 in the past 90 days.

    The company was the second-best performing stock in the Other Metals/Minerals industry with a weekly gain of 15.27%. On Friday, the price closed above resistance near $12.50 and made its highest closing price since February 19 on substantial volume. The price appears poised to test its 2020 high near $18.

    Materials Outperformer #4: Pretium Resources Inc (NYSE: PVG)

    Pretium is a gold and precious metals exploration company that is headquartered in Vancouver, Canada and primarily operates in British Columbia.

    The company missed analyst estimates of $0.08 by 37.5% in their most recent report. The company has also seen significant negative revisions to their upcoming quarterly and fiscal year EPS. However, the company is expected to experience significant earnings growth compares to last year with gold prices where they are.

    The company broke their $12.90 resistance on Wednesday of last week before falling back to that level of Thursday and Friday. The price is currently testing a multi-year high near $13. A break of that level would indicate a potential move to $18.

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