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3 Stocks Boosting The Diversified Services Industry Higher

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 127.73 points (-0.8%) at 16,384 as of Tuesday, May 20, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 774 issues advancing vs. 2,216 declining with 147 unchanged.

The Diversified Services industry as a whole closed the day down 1.1% versus the S&P 500, which was down 0.5%. Top gainers within the Diversified Services industry included DLH Holdings ( DLHC), up 3.8%, PDI ( PDII), up 3.3%, Industrial Services of America ( IDSA), up 4.2%, General Finance ( GFN), up 3.2% and Swisher Hygiene ( SWSH), up 3.9%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

General Finance ( GFN) is one of the companies that pushed the Diversified Services industry higher today. General Finance was up $0.26 (3.2%) to $8.47 on light volume. Throughout the day, 19,387 shares of General Finance exchanged hands as compared to its average daily volume of 28,400 shares. The stock ranged in a price between $8.15-$8.49 after having opened the day at $8.15 as compared to the previous trading day's close of $8.21.

General Finance Corporation, through its subsidiaries, leases and sells portable storage containers, portable container buildings, and freight containers. General Finance has a market cap of $208.8 million and is part of the services sector. Shares are up 35.3% year-to-date as of the close of trading on Monday. Currently there are 3 analysts who rate General Finance a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates General Finance as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on GFN go as follows:

  • GENERAL FINANCE CORP/DE has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GENERAL FINANCE CORP/DE increased its bottom line by earning $0.16 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus $0.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 165.0% when compared to the same quarter one year prior, rising from $0.75 million to $1.99 million.
  • Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 88.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Trading Companies & Distributors industry and the overall market, GENERAL FINANCE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: General Finance Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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