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3 Specialty Retail 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 67 points (0.4%) at 16,903 as of Friday, June 6, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,246 issues advancing vs. 764 declining with 128 unchanged.

The Specialty Retail industry as a whole closed the day up 0.5% versus the S&P 500, which was up 0.3%. Top gainers within the Specialty Retail industry included Mecox Lane ( MCOX), up 2.1%, Lentuo International ( LAS), up 1.9%, West Marine ( WMAR), up 3.6%, Build-A-Bear Workshop ( BBW), up 6.1% and XO Group ( XOXO), up 2.9%.

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

West Marine ( WMAR) is one of the companies that pushed the Specialty Retail industry higher today. West Marine was up $0.36 (3.6%) to $10.27 on average volume. Throughout the day, 45,161 shares of West Marine exchanged hands as compared to its average daily volume of 54,600 shares. The stock ranged in a price between $9.83-$10.28 after having opened the day at $9.99 as compared to the previous trading day's close of $9.91.

West Marine, Inc. operates as a specialty retailer of boating supplies, gear, apparel, footwear, and other water life-related products primarily in the United States. West Marine has a market cap of $242.3 million and is part of the financial sector. Shares are down 30.4% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates West Marine a buy, no analysts rate it a sell, and none rate it a hold.

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

TheStreet Ratings rates West Marine as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on WMAR go as follows:

  • Net operating cash flow has increased to -$27.75 million or 27.74% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.53%.
  • WMAR 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. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.6%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Specialty Retail industry. The net income has decreased by 13.2% when compared to the same quarter one year ago, dropping from -$9.73 million to -$11.02 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, WMAR has underperformed the S&P 500 Index, declining 13.34% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

You can view the full analysis from the report here: West Marine 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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