Following is some information about the best-performing stocks in the Basic Materials sector in 2011.

Valhi, Inc. (NYSE:VHI): The company has generated a strong amount of cash from its operations over the past two quarters and investors have bid the company’s stock up as a result. The company’s shares have returned 176.91% over the past year. The shares recently traded at $60.49.

Cabot Oil & Gas Corporation (NYSE:COG): Its stock has responded well to company efforts to reduce capital expenditures and increase the amount of cash that its operations generate.  Despite that the company has also increased the amount of cash it raised from the capital markets this year.  It issued $230 million in debt. The company’s shares have returned 104.60% over the past year. The shares recently traded at $76.75.

El Paso Corp. (NYSE:EP): Despite raising over $1 billion via the markets the company has also increased the amount of cash that its operations generate.  Investors responded well, bidding up its stock almost 100% over the year. The company’s shares have returned 93.07% over the past year. The shares recently traded at $26.41.

EV Energy Partners LP (NASDAQ:EVEP): The company has performed well over the past year because its operations are throwing off an increasing amount of cash, and the company has decreased its reliance on funding itself via the capital markets, as well as reducing its capital expenditures. The company’s shares have returned 76.01% over the past year. The shares recently traded at $65.56 and its market capitalization is $2,256,590,000.

Terra Nitrogen Company, L.P. (NYSE:TNH): The company’s stock has performed well because it has significantly increased its cash flow from operations, while reducing its capital expenditures and its reliance on funding from the capital markets.  Over the 9 months ending 9/30/11, the company generated $375.5 million from its operations, used only $37.6 million for capital expenditures and related expenses, and raised zero dollars from the capital markets.  This suggests that the company generates all the cash that it needs solely from its internal operations, a rare feat for a capital-intensive sector such as Basic Materials. The company’s shares have returned 66.36% over the past year.

To contact the reporter on this story: Dave Friedman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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