Rackspace Hosting Inc. (RAX): Today's Featured Technology Laggard

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 Technology sector lower today making it today's featured Technology laggard. The sector as a whole closed the day up 0.9%. By the end of trading, Rackspace Hosting fell $1.26 (-2.1%) to $57.74 on heavy volume. Throughout the day, 4.2 million shares of Rackspace Hosting exchanged hands as compared to its average daily volume of 1.6 million shares. The stock ranged in price between $56.81-$59.05 after having opened the day at $58.82 as compared to the previous trading day's close of $59. Other companies within the Technology sector that declined today were: Remark Media ( MARK), down 20.3%, Cimatron ( CIMT), down 17.7%, Revolution Lighting Technologies ( RVLT), down 15.4%, and Kingtone Wirelessinfo Solution ( KONE), down 12.1%.
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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 $8.08 billion and is part of the computer software & services industry. The company has a P/E ratio of 78.7, above the S&P 500 P/E ratio of 17.7. Shares are down 20.6% year to date as of the close of trading on Friday. Currently there are 10 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 expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Deltathree ( DDDC), up 66.7%, Renewable Energy Trade Board ( EBOD), up 46.7%, Hauppauge Digital ( HAUP), up 45.7%, and China Mobile Games and Entertainment Group ( CMGE), up 38.5%, were all gainers within the technology sector with Broadcom Corporation ( BRCM) being today's featured technology sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the technology sector could consider Technology Select Sector SPDR ( XLK) while those bearish on the technology sector could consider ProShares Ultra Short Technology ( REW).

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