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3 Stocks Improving Performance Of The Services Sector

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 14.32 points (-0.1%) at 16,933 as of Monday, June 23, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,387 issues advancing vs. 1,632 declining with 133 unchanged.

The Services sector as a whole closed the day down 0.1% versus the S&P 500, which was down 0.1%. Top gainers within the Services sector included Lime Energy ( LIME), up 2.6%, Acorn International ( ATV), up 1.7%, China HGS Real Estate ( HGSH), up 8.9%, Books-A-Million ( BAMM), up 1.9% and Dover Saddlery ( DOVR), up 6.7%.

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

China HGS Real Estate ( HGSH) is one of the companies that pushed the Services sector higher today. China HGS Real Estate was up $0.26 (8.9%) to $3.17 on heavy volume. Throughout the day, 73,956 shares of China HGS Real Estate exchanged hands as compared to its average daily volume of 10,300 shares. The stock ranged in a price between $2.97-$3.25 after having opened the day at $3.19 as compared to the previous trading day's close of $2.91.

China HGS Real Estate, Inc., through its subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd, develops real estate properties in the People's Republic of China. It is involved in the construction and sale of residential apartments, parking lots, and commercial properties. China HGS Real Estate has a market cap of $173.4 million and is part of the diversified services industry. Shares are down 51.1% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate China HGS Real Estate a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates China HGS Real Estate as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on HGSH go as follows:

  • HGSH's very impressive revenue growth greatly exceeded the industry average of 41.1%. Since the same quarter one year prior, revenues leaped by 157.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CHINA HGS REAL ESTATE INC reported significant earnings per share improvement 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 two years. During the past fiscal year, CHINA HGS REAL ESTATE INC increased its bottom line by earning $0.46 versus $0.11 in the prior year.
  • HGSH's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.13 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The gross profit margin for CHINA HGS REAL ESTATE INC is currently lower than what is desirable, coming in at 33.12%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 28.67% has significantly outperformed against the industry average.
  • Net operating cash flow has significantly decreased to -$3.65 million or 2084.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: China HGS Real Estate 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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