Sotheby's, Rambus Lead High-Flying Stocks - TheStreet



) -- U.S. stock-market benchmarks gave investors no love yesterday, with the three major indices falling. Here are three small-cap stocks that went their own way and hit 52-week highs.

3. Sotheby's

(BID) - Get Report

jumped 4.2% to $21.87.

Wedbush Securities

upgraded the art auctioneer to "outperform," citing a rebound in global demand for antiques and collectible art. Shares have risen 18% over the past month.


: The company's third-quarter loss widened 23% to $58 million, or 89 cents a share. Revenue fell 41% to $45 million. Sotheby's gross and operating margins remained in negative territory as expenses outstripped sales. The company endured losses during the recession as art investors favored more-liquid instruments. Sotheby's possesses ample liquidity, evident in its quick ratio of 2.4. Its 1 debt-to-equity ratio is higher than the industry average, indicating excessive leverage.

Our take

: We rate Sotheby's "hold." Despite recently impressive auction results, Sotheby's hasn't demonstrated a sustained return to profitability. Its latest quarterly loss exceeded those posted during 2008. Furthermore, its shares aren't particularly cheap. Sotheby's is more expensive than its average specialized consumer-service peer based on projected earnings and sales per share. We give the company a growth score of just 0.4 out of 10.

2. Rambus

(RMBS) - Get Report

climbed 3.4% to $22.27. The technology-licensing company announced the acquisition of a patent portfolio from

Global Lighting Technologies



: The company's third-quarter loss narrowed 11% to $28 million, or 26 cents a share. Revenue declined 5% to $28 million. Rambus' gross and operating margins remained in deep negative territory. Rambus hasn't had a single profitable quarter over the past three years. Fortunately, the company has a cash stockpile of $500 million. But its debt load isn't meager at $243 million. Rambus' 0.9 debt-to-equity ratio is higher than the industry average, indicating excessive leverage.

Our take

: We rate Rambus "sell." There is far too much uncertainty surrounding this company. Although its stock has advanced 53% over the past year, it's suitable only for speculative investors. The company receives weak scores from our model for its growth, volatility and financial strength. Its shares have a beta of 2, so they tend to rise and fall twice as much as the overall stock market.

1. Jones Lang LaSalle

(JLL) - Get Report

ascended 1.1% to $57.25. The real estate and money management company issued a note outlining its belief that vacancy rates will tighten in Australia during 2010. It also expects a pickup in hotel deals in the coming year.


: Third-quarter net income increased 32% to $20 million, and earnings per share climbed 7% to 46 cents. Revenue dropped 12% to $595 million. The company's gross margin remained steady at 11%, but its operating margin widened from 6% to 8%. A quick ratio of 0.8 indicates less-than-ideal liquidity. Its 0.3 debt-to-equity ratio is less than the industry average, reflecting modest leverage.

Our take

: We rate Jones Lang LaSalle "hold." Although the third-quarter marked its first profitable period of 2009, there are ongoing risks in the commercial real estate market. In addition, shares of Jones Lang LaSalle have more than doubled this year in anticipation of a rebound. The stock is less expensive than the average real estate service peer on the basis of projected earnings, book value, sales and cash flow. However, we give the company a growth score of just 2.9 out of 10.

-- Reported by Jake Lynch in Boston.