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NEW YORK (

TheStreet

)

-- Tucows

(Nasdaq:

TCX

) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, solid stock price performance, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 114.9% when compared to the same quarter one year prior, rising from $0.43 million to $0.92 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 95.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TCX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Although TCX's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.25 is very weak and demonstrates a lack of ability to pay short-term obligations.

Tucows Inc. distributes Internet services primarily in North America and Europe. Tucows has a market cap of $151.9 million and is part of the technology sector and internet industry. Shares are down 0.5% year to date as of the close of trading on Monday.

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