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

.

NEW YORK (

TheStreet

)

-- JTH

(Nasdaq:

TAX

) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:

  • TAX's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Consumer Services industry and the overall market, JTH HOLDING INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Consumer Services industry average. The net income increased by 142.4% when compared to the same quarter one year prior, rising from $1.67 million to $4.06 million.
  • Net operating cash flow has slightly increased to -$22.97 million or 4.98% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -18.09%.
  • Powered by its strong earnings growth of 133.33% and other important driving factors, this stock has surged by 71.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

JTH Holding, Inc., through its subsidiary, JTH Tax, Inc., provides federal and state tax preparation services and related financial products through retail offices and online in the United States and Canada. JTH has a market cap of $338.5 million and is part of the services sector and diversified services industry. Shares are up 13.8% year to date as of the close of trading on Tuesday.

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