In the economy most people work for the service economy and that tends to give us biases towards those industries. We see them on a daily basis and we believe everyone should be in those types of industries. The reality is the economy is based on basic materials and then has thankfully branched off from there. In a recent article from Peter Ashton of Recognia looked at US Basic Materials Stocks and some of them still look good. We know that resource industry is cyclical industry but when the cycle turns there is money to be made. Mr. Ashton began with companies great than $ 2 billion in market cap threshold and whose stocks are up 5% or more. In addition the stocks have a dividend yield of 0.5 or greater. The keys are remember to start with the best quality stocks possible and you should easily benefit when the cycle turns. The data allows you a place of beginning.
Company Mkt Cap Price Performance Debt to Equity Dividend
(US$Bil) (YTD) Ratio Yield (%)
Nucor 15.0 19.9 0.60 3.1
Reliance Steel 5.0 20.8 0.49 2.3
Cameco 5.0 6.0 0.27 2.3
Steel Dynamics 5.5 27.8 0.97 2.4
Martin Marietta 9.9 13.4 0.39 1.0
Wothington Ind 2.2 19.9 0.88 2.1
Vulcan Materials 14.1 11.1 0.45 0.5
Eagle Materials 3.5 16.2 0.48 0.6
Linking to dividend paying stocks, we all look for the great systems but there are normal waves in the stock market. Look to quality and ride cycles, let the market do what it does best and ride with it. Sometimes making money the easiest way takes a long time to see, but when you do take advantage with low risk.
There are more questions than answers, till the next time – to raising questions.
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