Trecora Resources (NYSE: TREC) and UFP Technologies (NASDAQ:UFPT) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.

Insider and Institutional Ownership

42.8% of Trecora Resources shares are owned by institutional investors. Comparatively, 69.3% of UFP Technologies shares are owned by institutional investors. 6.6% of Trecora Resources shares are owned by company insiders. Comparatively, 13.3% of UFP Technologies shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Trecora Resources and UFP Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trecora Resources 0 0 3 0 3.00
UFP Technologies 0 0 0 0 N/A

Trecora Resources currently has a consensus price target of $15.33, indicating a potential upside of 17.95%. Given Trecora Resources’ higher possible upside, analysts clearly believe Trecora Resources is more favorable than UFP Technologies.

Profitability

This table compares Trecora Resources and UFP Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trecora Resources 1.37% 3.74% 2.09%
UFP Technologies 5.43% 6.83% 6.03%

Earnings and Valuation

This table compares Trecora Resources and UFP Technologies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trecora Resources $212.40 million 1.49 $19.42 million $0.13 100.01
UFP Technologies $146.13 million 1.45 $7.97 million $1.09 26.74

Trecora Resources has higher revenue and earnings than UFP Technologies. UFP Technologies is trading at a lower price-to-earnings ratio than Trecora Resources, indicating that it is currently the more affordable of the two stocks.

About Trecora Resources

Trecora Resources (TREC) is a provider of high-purity specialty hydrocarbons and waxes. TREC owns and operates a facility located in southeast Texas, just north of Beaumont, which specializes in high-purity hydrocarbons and other petrochemical manufacturing. The Company operates through two segments: specialty petrochemical products and specialty synthetic waxes. The specialty petrochemical products segment operates through South Hampton Resources, Inc. (SHR). The specialty synthetic wax segment operates through Trecora Chemical, Inc. (TC). SHR owns and operates a specialty petrochemical facility that produces hydrocarbons and other petroleum-based products, including isopentane, normal pentane, isohexane and hexane. TC produces specialty polyethylene and poly alpha olefin waxes, and provides custom processing services. In addition, the Company is the 33.4% owner of Al Masane Al Kobra Mining Co., a Saudi Arabian joint stock company.

About UFP Technologies

UFP Technologies, Inc. is a designer and custom converter of foams, plastics, composites and natural fiber materials. The Company is engaged in providing solutions to customers primarily within the medical, automotive, consumer, electronics, industrial, and aerospace and defense markets. It converts these materials using laminating, molding, and fabricating manufacturing technologies. The Company’s raw materials consist of polyethylene and polyurethane foams, sheet plastics, pulp fiber, cross-linked polyethylene and reticulated polyurethane foams, fabric and foam laminates, and natural fiber materials. The Company converts these materials to provide customers various solutions, including automotive interior trim, medical device components, disposable wound care components, military uniform and gear components, athletic padding, air filtration, high-temperature insulation, abrasive nail files and other beauty aids, and cushion packaging for their products.

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