Which sector is expected see the most net income growth in 2011?

Finance? Tech? Oil and Energy?

How about Basic Materials?

Net income is projected to grow an impressive 35% for the Basic Materials sector in 2011, the most of any sector. In comparison, the S&P 500 is expected to see net income growth of 15% in 2011.

As Goes the Economy…

Part of the reason for this exceptional growth is the inherent cyclicality of the sector. For instance, during the global recession in 2009 the Basic Materials sector saw overall net income fall a whopping 50%. But as the economy began to pick back up in 2010, net income skyrocketed a remarkable 72%.

With global growth expected to continue in 2011, the Basic Materials sector should continue to soar.

Despite an incredible rebound last year and a bullish outlook for this year, the sector trades at just 13.9x 2011 earnings, the same as the S&P.

Two of the major components of the Basic Materials sector are the metals industry and the agriculture industry. Commodities like gold, silver, copper, iron, sugar, corn and wheat have been soaring, contributing to much of the overall growth in the sector.

Not Just Metals & Ag

While metals and ag may grab all the headlines, one major sector component that often gets overshadowed is the chemicals industry.

The chemicals industry is an integral part of the global economy, converting raw materials into more than 70,000 different products. Just like metals and agriculture, chemicals have benefited from surging global demand, which has led to rising prices and record profits.

There are several chemical stocks with enormous growth projections and reasonable valuations. Here are 4 set to soar in 2011:

Kronos Worldwide Inc. (KRO) manufactures titanium oxide pigments. TiO2 is a fine white powder used in products like paints, plastics and paper to give them maximum whiteness and opacity.

The company reported excellent fourth quarter results in March. Revenue jumped 24% year-over-year to $ 373.3 million on higher prices and volumes in all markets for TiO2. EPS came in at 66 cents, 3 cents ahead of the Zacks Consensus Estimate. This was up from 11 cents in the same quarter in 2009.

Estimates have been soaring off the strong quarter, sending the stock to a Zacks #1 Rank (Strong Buy). The Zacks Consensus Estimate for 2011 is $ 4.37, up from $ 3.48 sixty days ago. This represents 131% growth over 2010 EPS.

Despite the remarkable growth prospects, shares trade at just 13.3x forward earnings, a discount to the industry average of 14.8x. Its PEG ratio is an attractive 0.7.

PPG Industries (PPG) is the world’s leading coatings and specialty products company. It provides products for the construction, consumer products, industrial and transportation markets and aftermarkets. The company was founded in 1883 and is headquartered in Pittsburgh.

Estimates have been steadily rising as the company has delivered an impressive 11 consecutive positive earnings surprises. The Zacks Consensus Estimate for 2011 is currently $ 6.35, representing 22% EPS growth over 2010.

Valuation is reasonable with shares trading at 14.6x forward earnings, a slight discount to the industry average. The company also pays a dividend that yields 2.4%. It has paid a remarkable 450 consecutive dividend payments dating back to 1899.

It reports its results for the first quarter on April 21. PPG is a Zacks #1 Rank (Strong Buy) stock.

Olin Corp (OLN) operates in two business segments: Chlor Alkali and Winchester.

The Chlor Alkali division manufactures chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, potassium hydroxide and bleach products. The Winchester division, which accounts for about one-third of total revenue, makes ammunition.

Estimates have been soaring since the company reported Q4 EPS of 45 cents, crushing the Zacks Consensus Estimate of 5 cents. Olin’s results were driven by better than expected volumes and pricing in both segments.

Also shares jumped on the Q4 earnings beat, valuation is still attractive for this Zacks #1 Rank (Strong Buy) stock. Shares trade at 14.7x forward earnings, in-line with its peers, but its PEG ratio is only 0.67.

Like PPG, Olin Corp has been around since the 19th century. It was founded in 1892 and is based in Clayton, Missouri. The company has paid 337 consecutive quarterly dividends. It yields 3.2%.

Huntsman (HUN) manufactures differentiated chemicals for a myriad of industries around the globe. Approximately 39% of revenues come from polyurethanes.

The company has strung together three consecutive positive earnings surprises, including a 26% beat in the fourth quarter of 2010. Revenues for the quarter jumped 17% year-over-year as each segment saw higher average selling prices and most saw volume increases.

Estimates have been rising off the strong quarter, sending the stock to a Zacks #1 Rank (Strong Buy). The 2011 Zacks Consensus Estimate is $ 1.41, representing 69% growth over 2010 EPS.

The 2012 consensus estimate has also been rising. It currently stands at $ 1.79, corresponding to 27% EPS growth.

Shares trade at just 13.6x forward earnings, a discount to the industry average of 14.8x. It pays a dividend that yields 2.0%.

Conclusion

When you come across headlines touting soaring metal and agriculture prices, remember that the chemicals industry is booming too. These 4 stocks all have rising estimates, attractive valuations and are expected to see exceptional earnings growth in 2011.

Keep in mind, however, that the industry is heavily dependent on global economic conditions, and a downturn in economic activity would send these stocks plummeting.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

While investor awareness of Brazil is certainly viable, sometimes this country may suffer from hiding in China’s wings. For obvious reasons, everyone mentions China, China, China when looking at investing abroad. However, Brazil is no sleeping giant; this resource-rich country has transformed itself into a nation exceptionally worthy of long-term investment consideration. Over the next six years, Brazil will host the two largest sporting events in the world: FIFA World Cup in 2014 and the Olympics in 2016.

IT security firm Mcafee’s recent protection report In the Dark: Crucial Industries Confront Cyberattacks [PDF] highlights the ever growing threat of digital attacks on the nation’s core infrastructure systems.

At one time, proprietary and locally controlled computers were responsible for monitoring and maintaining everything from electricity distribution to water treatment. But, as companies look to reduce costs and simplify command and control operations, critical infrastructure systems are being connected directly to the internet, making it much easier and much more likely that they could be attacked by foreign governments, hackers, or criminals.

This year, in a sequel report, we focused on the critical civilian infrastructure that depends most heavily on industrial control systems. As with the first report, we used survey data, research, and interviews to obtain a detailed picture of cyber risks in these sectors. The sectors on which this report focuses — power, oil, gas, and water — may well be the first targets for a serious cyberattack.

What we found is that they are not ready. The professionals charged with protecting these systems report that the threat has accelerated — but the response has not. Cyberexploits and attacks are already widespread. Whether it is cybercriminals engaged in theft or extortion, or foreign governments preparing sophisticated exploits like Stuxnet, cyberattackers have targeted critical infrastructure.

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We found accelerating threats and vulnerabilities. For the second year in a row, IT executives in the critical infrastructure sector told us that they perceive a real and growing cyberthreat. Denialof- service attacks on energy networks increased. Extortion attempts were also more frequent in the CIP sectors. And hostile government infiltration of their networks achieved staggering levels of success.

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Despite these vulnerabilities, many power companies are doubling down on the danger; they are implementing “smart grid” technologies that give their IT systems more control over the delivery of power to individual customers — or even to individual appliances in customers’ homes. Without better security, this increased control can fall into the hands of criminals or “hacktivists,” giving them the ability to modify billing information and perhaps even control which customers or appliances get electricity. But security is not a priority for smart grid designers; according to Woolsey, who two years ago chaired a group that published a report for the Department of Defense on grid vulnerabilities. Ninety to ninety-five percent of the people working on the smart grid are not concerned about security and only see it as a last box they have to check.

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One of the more startling results of our research is the discovery of the constant probing and assault faced by these crucial utility networks.Some electric companies report thousands of probes every month. Our survey data lend support to anecdotal reporting that militaries in several countries have done reconnaissance and planning for cyberattacks on other nations’ power grids, mapping the underlying network infrastructure and locating vulnerabilities for future attack.

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More than 40 percent of the executives we interviewed expect a major cyberattack within 12 months — an attack, that is, that causes severe loss of services for at least 24 hours, a loss of life or personal injury, or the failure of a company.

Up until a couple years ago, the threat of total infrastructure failure existed only in the sphere of science fiction. Recently, however, the vulnerabilities of the physical hardware on power grids, water utility grids and other important infrastructure elements were made perfectly clear with the spread of the Stuxnet virus, which wrecked havoc on Iranian nuclear facilities. The virus, often referred to as malware, literally destroyed the physical centrifuges responsible for the enrichment of uranium by forcing them to spin out of control. All the while monitoring stations reported perfectly normal conditions.

The scary thing? Stuxnet isn’t isolated to just Iranian nuclear facilities:

Our data indicates that the Stuxnet virus did indeed have a global reach. Around 40 percent of respondents found Stuxnet on their computer systems. Stuxnet was more likely to appear in the electricity sector, where 46 percent of respondents found the malware.

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Stuxnet was an extraordinary advance in sophistication over the kinds of malware used by the criminal underground. The Belarusian security firm that initially identified Stuxnet at first believed it to be a backdoor for hackers. But closer inspection revealed the complex nature of the virus. It features multiple exploits that were previously unknown, has Microsoft Windows driver modules that had been signed using genuine cryptographic certificates stolen from respectable companies, contains about 4,000 functions, and uses advanced anti-analysis techniques to render reverse engineering difficult. It is almost certainly the work of a government, not a criminal gang.

In fact, Stuxnet was the work of a government – reportedly two of them. It is believed that intelligence agencies within the United States and Israel are responsible for its conception.

What this shows is that advanced computer scripts and malware target not just personal computers, but highly advanced, purportedly secure critical systems. Those who would attack the nation’s infrastructure could bring these systems down for not just 24 hours using traditional denial-of-service attacks, but potentially weeks and months by executing programs that directly attack the grid’s hardware .

A cyberattack on the US grid would be devastating.

Imagine, for a moment, what such an attack on our water utility plants might look like. While water safety conditions monitored by engineers on remote computer systems attached to the internet might look perfectly normal on the surface, a malicious virus may be at work behind the scenes, controlling the delivery (or lack thereof) of water treatment chemicals into an entire city or region’s water supply.

A similar attack could occur on the electrical grid, sending surges to vital transformers across the nation. Because many of our systems are decades’ old, they could be overwhelmed, much like Iran’s Siemens-built centrifuges. In such a scenario, because of the lack of availability of the damaged equipment and the sheer size of such a widespread attack, it could take weeks or months to repair.

There are roughly 150 oil refineries in the United States, and most of them are likely running on similar hardware, from well known industry manufacturers. Is it that much of a stretch to consider the possibility that a coordinated attack on these systems could send pressure and a host of other control mechanisms in our refineries out of control – all the while engineers monitoring the systems notice nothing out of the ordinary? Such an attack, even if partially successful, could cripple the entire country.

As infrastructure is further centralized, our exposure to potentially catastrophic events continues to increase. Not only is much of our nation’s infrastructure hardware outdated, but the security on newly integrated 21st century smart-grids is lax at best.

We’ve seen coordinated attacks on our stock trading systems. We’ve seen that high security nuclear control systems can be compromised. We know that governments, cyber criminal extortion gangs, hackers and shadow intelligence agencies are actively working on viruses, malware and gaming scenarios designed specifically to crush utility infrastructures on a national scale.

The threat is real. It is present. If such an attack were ever executed there will be nothing emergency responders could do, especially in the case of a widespread, coordinated onslaught of the grid.

Author: Mac Slavo

The New York Stock Exchange is one of the largest, most well-known stock exchanges in the world, boasting a storied history dating back to 1792. Today, its listed stocks have a combined market cap of more than $ 30 trillion. This exchange also carries a high degree of respect; due to its stringent listing standards, companies that are listed on the “Big Board” are assumed to have both credibility and prestige. This is why the majority of the 30 components that make up the Dow Jones Industrial Average (DJIA) are exclusively listed on the NYSE.

Bank of America Merrill Lynch said it expected Brent crude to hit $ 140 a barrel in the next three months, before falling later in the year as high prices curb demand.

Brent crude has traded as high as $ 127.02 in 2011, the highest since 2008 when prices reached an all-time peak above $ 147.

Influential banks in commodities are expressing contrasting views on whether the rally will persist.

“The time is not yet ripe for oil demand destruction, and we maintain our view that Brent oil will average $ 122 a barrel this quarter, with prices temporarily breaking through $ 140 a barrel in the next three months,” said the report dated April 19 by Bank of America Merrill Lynch analysts, including Francisco Blanch.

“However, with the first signs of demand destruction on the horizon and credit risks on the rise, we keep our view that Brent will average $ 94 a barrel in 4Q11.”

Bank of America’s view contrasts with that of Goldman Sachs, which on April 12 said it expected the market to experience a “substantial correction” towards its near-term target for Brent of $ 105 in the coming months.

Deutsche Bank also sees room for higher prices. On April 12, it raised its 2011 Brent forecast to $ 117.50 from $ 107.75.

Read more: Bank of America Sees UK Brent Oil Surging to $ 140