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3 Specialty Retail Stocks Nudging The 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 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 Specialty Retail industry as a whole closed the day up 1.2% versus the S&P 500, which was up 0.6%. Top gainers within the Specialty Retail industry included Sport Chalet ( SPCHB), up 1.8%, Lentuo International ( LAS), up 21.6%, China Auto Logistics ( CALI), up 9.1%, Mecox Lane ( MCOX), up 5.7% and Trans World Entertainment ( TWMC), up 2.3%.

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

China Auto Logistics ( CALI) is one of the companies that pushed the Specialty Retail industry higher today. China Auto Logistics was up $0.18 (9.1%) to $2.17 on light volume. Throughout the day, 17,915 shares of China Auto Logistics exchanged hands as compared to its average daily volume of 45,900 shares. The stock ranged in a price between $2.00-$2.34 after having opened the day at $2.00 as compared to the previous trading day's close of $1.99.

China Auto Logistics Inc. sells and trades in imported automobiles in the People's Republic of China. It operates in five segments: Sales of Automobiles, Financing Services, Web-Based Advertising, Automobile Value Added Services, and Auto Mall Management Services. China Auto Logistics has a market cap of $8.0 million and is part of the services sector. Shares are down 44.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate China Auto Logistics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates China Auto Logistics as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on CALI go as follows:

  • Net operating cash flow has significantly increased by 143.12% to $24.26 million when compared to the same quarter last year. In addition, CHINA AUTO LOGISTICS INC has also vastly surpassed the industry average cash flow growth rate of -8.51%.
  • The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 15.8% when compared to the same quarter one year prior, going from -$2.18 million to -$1.84 million.
  • The debt-to-equity ratio is very high at 2.37 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CALI maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
  • 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 Specialty Retail industry and the overall market, CHINA AUTO LOGISTICS INC'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: China Auto Logistics 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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