Rackspace Hosting Inc. (RAX): Today's Featured Computer Software & Services 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 Computer Software & Services industry higher today making it today's featured computer software & services winner. The industry as a whole closed the day down 0.7%. By the end of trading, Rackspace Hosting rose $0.44 (1.2%) to $35.99 on average volume. Throughout the day, 2,230,265 shares of Rackspace Hosting exchanged hands as compared to its average daily volume of 2,471,900 shares. The stock ranged in a price between $34.69-$36.28 after having opened the day at $35.08 as compared to the previous trading day's close of $35.55. Other companies within the Computer Software & Services industry that increased today were: Catamaran ( CTRX), up 10.9%, China Mobile Games and Entertainment Group ( CMGE), up 9.2%, ChyronHego ( CHYR), up 8.1% and Eplus ( PLUS), up 7.8%.
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Rackspace Hosting, Inc., through its subsidiaries, 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 $4.9 billion and is part of the technology sector. The company has a P/E ratio of 46.1, above the S&P 500 P/E ratio of 17.7. Shares are down 52.1% year to date as of the close of trading on Monday. Currently there are 5 analysts that rate Rackspace Hosting a buy, 2 analysts rate it a sell, and 13 rate it a hold.

TheStreet Ratings rates Rackspace Hosting as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

On the negative front, Workday ( WDAY), down 6.5%, ARC Document Solutions ( ARC), down 5.6%, FalconStor Software ( FALC), down 5.0% and Avid Technology ( AVID), down 4.8% , were all laggards within the computer software & services industry with Microsoft Corporation ( MSFT) being today's computer software & services industry laggard.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the computer software & services industry could consider iShares S&P NA Tech Software Idx ( IGV) while those bearish on the computer software & services industry could consider ProShares Ultra Short Technology ( REW).

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