The following is a list of material sector stocks. All of these companies have seen inventories grow faster than revenues during the most recent quarter, an accounting trend that deserves closer attention.
There are two ways to interpret this trend: When a company's inventories are rising at a faster rate than its sales, it may indicate that the company is having trouble selling its merchandise. In other cases, it can indicate that the company is boosting inventories because they are growing more confident about the economy and seeing demand growth for their products.
The bottom line: Use this list as a starting point for your own analysis. Check out the 10-Q and read management discussions to see if there's a good explanation for this trend.
Accounting data sourced from MSN Money, short float and performance data sourced from Finviz.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
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The list has been sorted by the difference between revenue and inventory growth rates.
1. Green Plains Renewable Energy, Inc. (GPRE): Specialty Chemicals Industry. Market cap of $415.76M. MRQ revenue grew by 37.21% on a y/y basis, much slower than inventory growth at 149.39%. Inventory, as a percentage of current assets, increased from 25.77% to 29.34% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 10.15%, which implies a short ratio of 7.44 days. The stock has lost -31.49% over the last year.
2. Schlumberger Limited (SLB): Oil & Gas Equipment & Services Industry. Market cap of $126.37B. MRQ revenue grew by 56.94% on a y/y basis, much slower than inventory growth at 103.86%. Inventory, as a percentage of current assets, increased from 13.67% to 21.02% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 1.02%, which implies a short ratio of 1.82 days. The stock has gained 53.93% over the last year.
3. Tesoro Corporation (TSO): Oil & Gas Refining & Marketing Industry. Market cap of $3.46B. MRQ revenue grew by 12.19% on a y/y basis, much slower than inventory growth at 52.03%. Inventory, as a percentage of current assets, increased from 28.81% to 41.4% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 13.48%, which implies a short ratio of 3.23 days. The stock has gained 102.77% over the last year.
4. Carpenter Technology Corp. (CRS): Steel & Iron Industry. Market cap of $1.83B. MRQ revenue grew by 42.38% on a y/y basis, much slower than inventory growth at 74.83%. Inventory, as a percentage of current assets, increased from 24.91% to 40.04% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 4.24%, which implies a short ratio of 4.09 days. The stock has gained 41.75% over the last year.
5. NewMarket Corp. (NEU): Specialty Chemicals Industry. Market cap of $1.77B. MRQ revenue grew by 13.95% on a y/y basis, much slower than inventory growth at 41.64%. Inventory, as a percentage of current assets, increased from 31.98% to 45.33% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 8.4%, which implies a short ratio of 14 days. The stock has gained 44.89% over the last year.
6. Kraton Performance Polymers Inc. (KRA): Chemicals Industry. Market cap of $1.04B. MRQ revenue grew by 16.26% on a y/y basis, much slower than inventory growth at 32.37%. Inventory, as a percentage of current assets, increased from 57.47% to 58.43% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 2.82%, which implies a short ratio of 4.31 days. The stock has gained 146.63% over the last year.
7. Coeur d`Alene Mines Corporation (CDE): Silver Industry. Market cap of $2.47B. MRQ revenue grew by 31.28% on a y/y basis, much slower than inventory growth at 47.17%. Inventory, as a percentage of current assets, increased from 35.92% to 44.53% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 7.67%, which implies a short ratio of 2.92 days. The stock has gained 88.74% over the last year.
8. Golden Star Resources, Ltd. (GSS): Gold Industry. Market cap of $806.55M. MRQ revenue dropped -0.14% on a y/y basis, much slower than inventory growth at 12.72%. Inventory, as a percentage of current assets, increased from 42.85% to 21.62% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 3.56%, which implies a short ratio of 2.53 days. The stock has lost -0.64% over the last year.
9. Celanese Corp. (CE): Chemicals Industry. Market cap of $6.4B. MRQ revenue grew by 8.57% on a y/y basis, much slower than inventory growth at 16.86%. Inventory, as a percentage of current assets, increased from 18.28% to 22.86% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 0.75%, which implies a short ratio of 0.84 days. The stock has gained 32.28% over the last year.
10. Alcoa, Inc. (AA): Aluminum Industry. Market cap of $17.73B. MRQ revenue grew by 4.03% on a y/y basis, much slower than inventory growth at 10.05%. Inventory, as a percentage of current assets, increased from 33.15% to 37.3% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 5.96%, which implies a short ratio of 2.19 days. The stock has gained 26.56% over the last year.
11. Delek US Holdings Inc. (DK): Oil & Gas Refining & Marketing Industry. Market cap of $606.56M. MRQ revenue grew by 4.78% on a y/y basis, much slower than inventory growth at 10.74%. Inventory, as a percentage of current assets, increased from 34.2% to 52.2% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 12.63%, which implies a short ratio of 9.85 days. The stock has gained 56.6% over the last year.
12. Dynamic Materials Corp. (BOOM): Industrial Metals & Minerals Industry. Market cap of $328.02M. MRQ revenue grew by 5.16% on a y/y basis, much slower than inventory growth at 10.4%. Inventory, as a percentage of current assets, increased from 36.94% to 49.33% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 3.91%, which implies a short ratio of 3.81 days. The stock has gained 38.44% over the last year.
13. Martin Midstream Partners LP (MMLP): Independent Oil & Gas Industry. Market cap of $789.78M. MRQ revenue grew by 22.68% on a y/y basis, much slower than inventory growth at 27.25%. Inventory, as a percentage of current assets, increased from 33.05% to 35.68% (comparing 3 months ending 09-30-2010 vs. 3 months ending 09-30-2009). Short float at 0.67%, which implies a short ratio of 0.44 days. The stock has gained 34.53% over the last year.
14. Air Products & Chemicals Inc. (APD): Chemicals Industry. Market cap of $19.65B. MRQ revenue grew by 10.04% on a y/y basis, much slower than inventory growth at 12.74%. Inventory, as a percentage of current assets, increased from 23.53% to 25.72% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 0.51%, which implies a short ratio of 0.84 days. The stock has gained 36.69% over the last year.
15. World Fuel Services Corp. (INT): Oil & Gas Refining & Marketing Industry. Market cap of $2.86B. MRQ revenue grew by 64.41% on a y/y basis, much slower than inventory growth at 66.83%. Inventory, as a percentage of current assets, increased from 8.64% to 10.23% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 8.68%, which implies a short ratio of 9.15 days. The stock has gained 57.38% over the last year.
16. AK Steel Holding Corporation (AKS): Steel & Iron Industry. Market cap of $1.74B. MRQ revenue grew by 5.36% on a y/y basis, much slower than inventory growth at 7.68%. Inventory, as a percentage of current assets, increased from 25.56% to 31.96% (comparing 3 months ending 12-31-2010 vs. 3 months ending 12-31-2009). Short float at 14.69%, which implies a short ratio of 1.94 days. The stock has lost -25.8% over the last year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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