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3 Diversified Services Stocks Moving The Industry Upward

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 traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 69 points (0.4%) at 16,675 as of Tuesday, May 27, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,940 issues advancing vs. 1,055 declining with 160 unchanged.

The Diversified Services industry as a whole closed the day up 1.4% versus the S&P 500, which was up 0.6%. Top gainers within the Diversified Services industry included China Yida ( CNYD), up 2.6%, RLJ Entertainment ( RLJE), up 3.9%, Lime Energy ( LIME), up 3.1%, Bioanalytical Systems ( BASI), up 4.2% and Birner Dental Management Services ( BDMS), up 2.9%.

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

Lime Energy ( LIME) is one of the companies that pushed the Diversified Services industry higher today. Lime Energy was up $0.08 (3.1%) to $2.66 on light volume. Throughout the day, 2,317 shares of Lime Energy exchanged hands as compared to its average daily volume of 12,400 shares. The stock ranged in a price between $2.56-$2.66 after having opened the day at $2.56 as compared to the previous trading day's close of $2.58.

Lime Energy Co. is engaged in designing and implementing energy efficiency programs for utilities in the United States. Lime Energy has a market cap of $9.6 million and is part of the services sector. Shares are down 10.7% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Lime Energy a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Lime Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LIME go as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, LIME ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LIME ENERGY CO is currently lower than what is desirable, coming in at 28.12%. Regardless of LIME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LIME's net profit margin of -21.66% significantly underperformed when compared to the industry average.
  • Looking at the price performance of LIME's shares over the past 12 months, there is not much good news to report: the stock is down 47.91%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • LIME ENERGY CO's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LIME ENERGY CO continued to lose money by earning -$3.88 versus -$4.48 in the prior year.
  • LIME has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that LIME's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.

You can view the full analysis from the report here: Lime Energy 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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