How TheStreet Rates These Big-Name 2013 Stocks

NEW YORK (TheStreet) -- Before we ring in 2014, TheStreet Ratings team reiterates its ratings for some of the biggest names in 2013: Tesla (TSLA), Apple (AAPL), Google (GOOG) and Facebook (FB).

Tesla, though plagued with safety concerns in the final months of 2013, has enjoyed the status as one of the market's high-momentum stock plays. Over the year, the automaker soared 342.4% to end at $149.79.

TSLA Chart TSLA data by YCharts

Despite its gains, TheStreet Ratings team rates TESLA MOTORS INC as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, TSLA maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 30.44%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -8.92% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TESLA MOTORS INC reported significant earnings per share improvement 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, TESLA MOTORS INC reported poor results of -$3.70 versus -$2.52 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus -$3.70).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 65.3% when compared to the same quarter one year prior, rising from -$110.81 million to -$38.50 million.

Apple might be the tech industry's darling but it enjoyed small gains over the year, closing 2013 only 5.3% higher to $560.40.

AAPL Chart AAPL data by YCharts

The possibility of steady gains over 2014 encourages TheStreet Ratings team to maintain APPLE INC as a Buy with a ratings score of A+. The team has this to say about their recommendation:

"We rate APPLE INC (AAPL) a BUY. 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, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
  • Although AAPL's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908.00 million or 8.45% when compared to the same quarter last year. In addition, APPLE INC has also modestly surpassed the industry average cash flow growth rate of 6.87%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • 41.78% is the gross profit margin for APPLE INC which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 20.04% compares favorably to the industry average.

Google rocketed past the $1000-a-share mark this year, ending 58.3% higher to $1,118.78.

GOOG Chart GOOG data by YCharts

TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOG) a BUY. 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, growth in earnings per share and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GOOG's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although GOOG's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.50, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 34.41% and other important driving factors, this stock has surged by 57.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GOOG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • GOOGLE INC has improved earnings per share by 34.4% 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, GOOGLE INC increased its bottom line by earning $32.47 versus $29.74 in the prior year. This year, the market expects an improvement in earnings ($44.08 versus $32.47).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 36.5% when compared to the same quarter one year prior, rising from $2,176.00 million to $2,970.00 million.

The social network king, Facebook, climbed 104.1% to end 2013 at $54.33.

FB Chart FB data by YCharts

Even so, TheStreet Ratings team rates FACEBOOK INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate FACEBOOK INC (FB) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FB's very impressive revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues leaped by 59.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although FB's debt-to-equity ratio of 0.04 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 10.37, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 950.00% and other important driving factors, this stock has surged by 117.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • When compared to other companies in the Internet Software & Services industry and the overall market, FACEBOOK INC's return on equity is below that of both the industry average and the S&P 500.

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