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Materials Sector

Materials Sector. Ticker: XLB Frank McLaughlin Walter Nabarrete. Overview. Includes companies that are involved with the discovery and processing of raw materials Ranges from chemical producers to forestry product manufacturers to companies that mine and refine metals

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Materials Sector

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  1. Materials Sector Ticker: XLB Frank McLaughlin Walter Nabarrete

  2. Overview • Includes companies that are involved with the discovery and processing of raw materials • Ranges from chemical producers to forestry product manufacturers to companies that mine and refine metals • Largest holdings: Mansanto – 11.34%, DuPont – 9.11% and Dow Chemical – 8.41%

  3. MAT – Last Semester 08/20/2012 – 1/24/2013

  4. XLB vs S&P 500

  5. Current State of Sector • Professional Viewpoint: Slightly Bullish • Good performer in 2012 & off to quick start in 2013 • Relying heavy on chemical sector • Currently outperforming S&P • Macroeconomic Threats • Crude oil prices could rise • Gold & mining companies not performing well • Sector depends heavily on strong economy

  6. Biggest Movers (Past 3 Months) • Positive: • Monsanto +15.02% • Dow Chemical +13.90% • Negative: • Newmont Mining Corp. -17.95% • Freeport-McMoran Copper & Gold -16.74%

  7. Recent Headlines • China Rallying Economic Strength • Great news for manufacturing & raw materials • Monsanto Ends Patent Dispute with Brazilian Farmers • Dow Chemical Resigns from National Association of Manufacturers (NAM) • Opposes natural gas exports

  8. Key Drivers • Increase in World Population • More Food • World Population 9.3 Billion by 2050 • Health of Economy • Increased Consumption • Available Land • New Crop Growing Technology

  9. Key Drivers • Cost of Energy • Natural Gas • Government Regulation • Safety of Product • Supply and Demand

  10. Relevant Valuation Matrices • P/E Ratio • P/S Ratio • Materials Sector is Sensitive to the Business Cycle • Keep Debt and Profit Margins in Mind • P/B Ratio • A lot of Capital

  11. The Mosaic Company (MOS) • Date Presented: Oct. 16th • Recommendation: No • Vote: N/A • Price Then: $54.49 • Price Now: $59.46 • MOS announced it has plans to open a $700 million Ammonia plant. • Expanding its Potash operation.

  12. The Mosaic Company

  13. Freeport-McMoRan Copper & Gold Inc. (FCX) • Date Presented: Nov. 1st • Recommendation: No • Vote: N/A • Price Then: $40.50 • Price Now: $35.02 • Merger with Plains Exploration & Production Company and McMoRan Exploration Co. on December 5, 2012.

  14. Freeport-McMoRan Copper & Gold

  15. Sigma-Aldrich Corporation (Ticker: SIAL) • Date Presented: Nov.27th • Recommendation: No • Vote: N/A • Price Then: $72.20 • Price Now: $76.91 • Agreed to 50/50 joint venture with Soulbrain Co. Ltd. On December 21, 2012.

  16. Sigma-Aldrich Corporation

  17. Sources • http://finviz.com/map.ashx?t=sec&st=w13 • Finance.yahoo.com • Reuters.com • http://seekingalpha.com/article/1123161-macroeconomics-technicals-and-seasonality-all-pointing-to-higher-crude-prices?source=yahoo • http://seekingalpha.com/article/1111171-is-manufacturing-getting-ready-to-save-us-again?source=yahoo • http://www.bizjournals.com/stlouis/blog/2013/01/monsanto-offers-compromise-to.html • http://www.forbes.com/sites/jonentine/2013/01/24/odd-couple-will-dow-chemical-and-ed-markeys-opposition-to-natural-gas-exports-cripple-americas-energy-advantage/ • https://www.fidelity.com/viewpoints/materials-sectors-2012 • http://www.investopedia.com/articles/fundamental/03/032603.asp • http://www.investopedia.com/terms/c/capitalintensive.asp#axzz2IqZOVAIT • http://www.investopedia.com/articles/basics/10/profit-with-pe-power.asp#axzz2IqZOVAIT • http://finance.yahoo.com/news/sigma-aldrich-form-joint-venture-130000776.html

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