Rackspace Hosting Inc. (RAX): Today's Featured Internet Winner

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Rackspace Hosting ( RAX) pushed the Internet industry higher today making it today's featured internet winner. The industry as a whole closed the day down 0.1%. By the end of trading, Rackspace Hosting rose $1.07 (1.6%) to $68.34 on light volume. Throughout the day, 839,680 shares of Rackspace Hosting exchanged hands as compared to its average daily volume of 1.8 million shares. The stock ranged in a price between $67.06-$68.47 after having opened the day at $67.39 as compared to the previous trading day's close of $67.27. Other companies within the Internet industry that increased today were: Remark Media ( MARK), up 6.3%, Vipshop Holdings Ltd ADR ( VIPS), up 4.2%, Jiayuan.com International Ltd ADR ( DATE), up 3.9%, and Web.com Group ( WWWW), up 3.6%.
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Rackspace Hosting, Inc. provides cloud computing services, managing Web-based IT systems for small and medium-sized businesses, and large enterprises worldwide. Rackspace Hosting has a market cap of $9.09 billion and is part of the technology sector. The company has a P/E ratio of 101.6, above the average computer software & services industry P/E ratio of 100.1 and above the S&P 500 P/E ratio of 17.7. Shares are up 56.4% year to date as of the close of trading on Friday. Currently there are nine analysts that rate Rackspace Hosting a buy, no analysts rate it a sell, and eight rate it a hold.

TheStreet Ratings rates Rackspace Hosting as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

On the negative front, Authentidate Holding Corporation ( ADAT), down 8.1%, ExactTarget ( ET), down 5.5%, LiveDeal ( LIVE), down 5.4%, and Travelzoo ( TZOO), down 4.3%, were all laggards within the internet industry with Yahoo ( YHOO) being today's internet industry laggard.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the internet industry could consider First Trust Dow Jones Internet Idx ( FDN) while those bearish on the internet industry could consider ProShares Ultra Short Technology ( REW).

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