By Edward Krudy
NEW YORK, Aug 26 (Reuters) - Small cap material companies held up well in an otherwise sagging market on Thursday as a healthy demand outlook prompted brokers to upgrade their ratings on several stocks in the sector.
Longbow Research raised chemicals makers PolyOne Corp and A. Schulman Inc to 'buy' from 'neutral,' and said demand from the healthcare, food, automotive and industrial markets appeared to remain solid.
KeyBanc Capital Markets raised Brush Engineered Materials Inc to 'buy' from 'hold,' saying it expects sustained profit momentum at the company's specialty engineered alloys segment, pointing to revenue growth and a solid balance sheet.
Zahid Siddique, a portfolio manager at Gabelli Equity Trust, who specializes in the industrial sector, says he continues to see value in the market although he anticipates more volatility through year-end as investors continue to worry about the economy.
'There's a lot of bargain hunters just sitting on the sidelines, investors have cash and they're waiting for the right opportunity, and as markets decline they will start to come in,' he said.
The S&P MidCap 400 index fell 0.6 percent while the S&P SmallCap 600 index lost 0.8 percent. In comparison, the benchmark S&P 500 dropped 0.8 percent.
PolyOne rose 1.1 percent to $9.46, A. Schulman added 2.4 percent to $17.85, while Brush Engineered Materials rose 7.6 percent to $23.39. The gains helped keep the S&P small cap material index in the black for most of the day although the index fell late to finish marginally down.
Cyclical sectors have been the worst performers in the market sell-off this summer. The small cap materials index has fallen 21.6 percent since a year-high in April. That compares to small cap utilities that have lost only 3.4 percent.
In earnings news, shares in Jo-Ann Stores Inc, rose 11.7 percent to $41.14, after the retailer posted a quarterly profit that beat market expectations as benefits from sourcing and control of inventory boosted gross margins, prompting the fabric and crafts retailer to raise its full-year profit view.
Heico Corp, the aircraft component replacement maker, posted quarterly results above market estimates, helped by strong performance of its electronic technologies group, and raised its 2010 outlook. Its shares rose 15.3 percent to $41.76.
On the downside, shares in Conn's Inc fell 13.5 percent to $4.55 after the electronics and home appliances retailer posted a lower-than-expected quarterly profit, partly hurt by increased delinquencies in its credit segment.
(Reporting by Edward Krudy; Editing by Eric Walsh) Keywords: MARKETS STOCKS/SMALLMID (edward.krudy@thomsonreuters.com; Tel: +1 646-223-6314; Reuters Messaging: edward.krudy@reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Aug 26 (Reuters) - Small cap material companies held up well in an otherwise sagging market on Thursday as a healthy demand outlook prompted brokers to upgrade their ratings on several stocks in the sector.
Longbow Research raised chemicals makers PolyOne Corp and A. Schulman Inc to 'buy' from 'neutral,' and said demand from the healthcare, food, automotive and industrial markets appeared to remain solid.
KeyBanc Capital Markets raised Brush Engineered Materials Inc to 'buy' from 'hold,' saying it expects sustained profit momentum at the company's specialty engineered alloys segment, pointing to revenue growth and a solid balance sheet.
Zahid Siddique, a portfolio manager at Gabelli Equity Trust, who specializes in the industrial sector, says he continues to see value in the market although he anticipates more volatility through year-end as investors continue to worry about the economy.
'There's a lot of bargain hunters just sitting on the sidelines, investors have cash and they're waiting for the right opportunity, and as markets decline they will start to come in,' he said.
The S&P MidCap 400 index fell 0.6 percent while the S&P SmallCap 600 index lost 0.8 percent. In comparison, the benchmark S&P 500 dropped 0.8 percent.
PolyOne rose 1.1 percent to $9.46, A. Schulman added 2.4 percent to $17.85, while Brush Engineered Materials rose 7.6 percent to $23.39. The gains helped keep the S&P small cap material index in the black for most of the day although the index fell late to finish marginally down.
Cyclical sectors have been the worst performers in the market sell-off this summer. The small cap materials index has fallen 21.6 percent since a year-high in April. That compares to small cap utilities that have lost only 3.4 percent.
In earnings news, shares in Jo-Ann Stores Inc, rose 11.7 percent to $41.14, after the retailer posted a quarterly profit that beat market expectations as benefits from sourcing and control of inventory boosted gross margins, prompting the fabric and crafts retailer to raise its full-year profit view.
Heico Corp, the aircraft component replacement maker, posted quarterly results above market estimates, helped by strong performance of its electronic technologies group, and raised its 2010 outlook. Its shares rose 15.3 percent to $41.76.
On the downside, shares in Conn's Inc fell 13.5 percent to $4.55 after the electronics and home appliances retailer posted a lower-than-expected quarterly profit, partly hurt by increased delinquencies in its credit segment.
(Reporting by Edward Krudy; Editing by Eric Walsh) Keywords: MARKETS STOCKS/SMALLMID (edward.krudy@thomsonreuters.com; Tel: +1 646-223-6314; Reuters Messaging: edward.krudy@reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.