5 Tech Stocks to Buy for 2013: NeuStar

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.

NEW YORK ( TheStreet Ratings) -- TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

TheStreet Ratings model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel -- rather, use them as a starting point for your own research.

The following pages contain our analysis of 5 out of 50 stocks TheStreet Ratings has identified as being rated a "Buy" heading into the New Year. To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Monotype Imaging Holdings (NASDAQ: TYPE) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

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 Software industry. The net income increased by 33.3% when compared to the same quarter one year prior, rising from $5.99 million to $7.99 million.
  • MONOTYPE IMAGING HOLDINGS has improved earnings per share by 31.3% 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. We feel that this trend should continue. During the past fiscal year, MONOTYPE IMAGING HOLDINGS increased its bottom line by earning $0.61 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($1.04 versus $0.61).
  • TYPE's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
  • The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 23.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Monotype Imaging Holdings Inc., through its subsidiaries, provides end-user and embedded text imaging solutions and services for use in print, Web, and mobile environments that enable people to create and consume content on various devices.

You can view the full Monotype Imaging Holdings Ratings Report or get investment ideas from our investment research center.

Computer Task Group (NASDAQ: CTGX) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

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 IT Services industry. The net income increased by 27.5% when compared to the same quarter one year prior, rising from $2.99 million to $3.81 million.
  • COMPUTER TASK GROUP INC has improved earnings per share by 27.8% 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. We feel that this trend should continue. During the past fiscal year, COMPUTER TASK GROUP INC increased its bottom line by earning $0.72 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.72).
  • Powered by its strong earnings growth of 27.77% and other important driving factors, this stock has surged by 34.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CTGX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CTGX has a quick ratio of 2.18, which demonstrates the ability of the company to cover short-term liquidity needs.

Computer Task Group, Incorporated operates as an information technology (IT) solutions and staffing company primarily in North America and Europe.

You can view the full Computer Task Group Ratings Report or get investment ideas from our investment research center.

Telular Corporation (NASDAQ: WRLS) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, solid stock price performance, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Communications Equipment industry average. The net income increased by 0.2% when compared to the same quarter one year prior, going from $1.62 million to $1.62 million.
  • TELULAR CORP's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TELULAR CORP increased its bottom line by earning $0.34 versus $0.26 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.34).
  • Compared to its closing price of one year ago, WRLS's share price has jumped by 38.19%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • WRLS's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 79.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Telular Corporation designs, develops, and distributes products and services that utilize wireless networks to provide data and voice connectivity among people and machines primarily in the United States and Latin America.

You can view the full Telular Corporation Ratings Report or get investment ideas from our investment research center.

Exlservice Holdings (NASDAQ: EXLS) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 74.06% to $23.90 million when compared to the same quarter last year. In addition, EXLSERVICE HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -5.77%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 39.5% when compared to the same quarter one year prior, rising from $8.39 million to $11.70 million
  • EXLSERVICE HOLDINGS INC has improved earnings per share by 29.6% 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. We feel that this trend should continue. During the past fiscal year, EXLSERVICE HOLDINGS INC increased its bottom line by earning $1.10 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.10).
  • EXLS's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.

Exlservice Holdings, Inc., together with its subsidiaries, provides outsourcing and transformation services primarily in the United States and the United Kingdom.

You can view the full Exlservice Holdings Ratings Report or get investment ideas from our investment research center.

NeuStar (NYSE: NSR) is rated at BUY with a grade of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

To view a list of all 50 stocks simply download our FREE report by clicking: HERE

Highlights from the ratings report include:
  • The gross profit margin for NEUSTAR INC is currently very high, coming in at 78.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.66% is above that of the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 21.1% when compared to the same quarter one year prior, going from $37.77 million to $45.75 million.
  • NEUSTAR INC has improved earnings per share by 33.3% 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. We feel that this trend should continue. During the past fiscal year, NEUSTAR INC increased its bottom line by earning $1.66 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $1.66).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

NeuStar, Inc. provides technology and directory services to its communications service provider (carrier) and non-carrier, commercial business customers worldwide. The company operates in three segments: Carrier Services, Enterprise Services, and Information Services.

You can view the full NeuStar Ratings Report or get investment ideas from our investment research center.

This is just a list of 5 of 50 stocks! Download a list of all 50 of TheStreet Ratings Tech Picks for 2013 NOW!

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.
Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.