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For those looking to find strong Basic Materials stocks, it is prudent to search for companies in the group that are outperforming their peers. DRDGOLD (DRD) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Basic Materials peers, we might be able to answer that question.
DRDGOLD is one of 240 individual stocks in the Basic Materials sector. Collectively, these companies sit at #7 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.
The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. DRDGOLD is currently sporting a Zacks Rank of #2 (Buy).
Within the past quarter, the Zacks Consensus Estimate for DRD's full-year earnings has moved 14.3% higher. This shows that analyst sentiment has improved and the company's earnings outlook is stronger.
Based on the most recent data, DRD has returned 8.6% so far this year. In comparison, Basic Materials companies have returned an average of 0.5%. As we can see, DRDGOLD is performing better than its sector in the calendar year.
One other Basic Materials stock that has outperformed the sector so far this year is Ecolab (ECL). The stock is up 16.9% year-to-date.
For Ecolab, the consensus EPS estimate for the current year has increased 3% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
To break things down more, DRDGOLD belongs to the Mining - Gold industry, a group that includes 39 individual companies and currently sits at #30 in the Zacks Industry Rank. Stocks in this group have gained about 15% so far this year, so DRD is slightly underperforming its industry this group in terms of year-to-date returns.
In contrast, Ecolab falls under the Chemical - Specialty industry. Currently, this industry has 33 stocks and is ranked #152. Since the beginning of the year, the industry has moved -20%.
Going forward, investors interested in Basic Materials stocks should continue to pay close attention to DRDGOLD and Ecolab as they could maintain their solid performance.
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