3 Diversified Services Stocks Moving The Industry Upward

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 112 points (0.7%) at 16,695 as of Monday, May 12, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,429 issues advancing vs. 632 declining with 133 unchanged.

The Diversified Services industry as a whole closed the day up 2.0% versus the S&P 500, which was up 1.0%. Top gainers within the Diversified Services industry included Universal Security Instruments ( UUU), up 4.6%, Lime Energy ( LIME), up 2.6%, Willdan Group ( WLDN), up 1.8%, PDI ( PDII), up 5.0% and SmartPros ( SPRO), up 5.0%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Willdan Group ( WLDN) is one of the companies that pushed the Diversified Services industry higher today. Willdan Group was up $0.09 (1.8%) to $5.11 on heavy volume. Throughout the day, 20,879 shares of Willdan Group exchanged hands as compared to its average daily volume of 8,800 shares. The stock ranged in a price between $5.03-$5.22 after having opened the day at $5.17 as compared to the previous trading day's close of $5.02.

Willdan Group, Inc., together with its subsidiaries, provides professional technical and consulting services to public agencies at various levels of government, public and private utilities, and commercial and industrial firms in the Unites States. Willdan Group has a market cap of $34.5 million and is part of the technology sector. Shares are down 5.5% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Willdan Group a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Willdan Group as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from TheStreet Ratings analysis on WLDN go as follows:

  • Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 106.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • WILLDAN GROUP INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, WILLDAN GROUP INC turned its bottom line around by earning $0.34 versus -$2.37 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus $0.34).
  • 39.97% is the gross profit margin for WILLDAN GROUP INC which we consider to be strong. Regardless of WLDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WLDN's net profit margin of 3.12% compares favorably to the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Construction & Engineering industry and the overall market, WILLDAN GROUP INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.95 million or 543.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

You can view the full analysis from the report here: Willdan Group Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

At the close, Lime Energy ( LIME) was up $0.07 (2.6%) to $2.79 on average volume. Throughout the day, 9,823 shares of Lime Energy exchanged hands as compared to its average daily volume of 12,200 shares. The stock ranged in a price between $2.70-$2.84 after having opened the day at $2.70 as compared to the previous trading day's close of $2.72.

Lime Energy Co. is engaged in designing and implementing energy efficiency programs for utilities in the United States. Lime Energy has a market cap of $10.1 million and is part of the technology sector. Shares are down 5.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Lime Energy a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Lime Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LIME go as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, LIME ENERGY CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LIME ENERGY CO is currently lower than what is desirable, coming in at 28.12%. Regardless of LIME's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LIME's net profit margin of -21.66% significantly underperformed when compared to the industry average.
  • Looking at the price performance of LIME's shares over the past 12 months, there is not much good news to report: the stock is down 51.61%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • LIME ENERGY CO's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LIME ENERGY CO continued to lose money by earning -$3.88 versus -$4.48 in the prior year.
  • LIME 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. Despite the fact that LIME's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.

You can view the full analysis from the report here: Lime Energy Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Universal Security Instruments ( UUU) was another company that pushed the Diversified Services industry higher today. Universal Security Instruments was up $0.19 (4.6%) to $4.35 on light volume. Throughout the day, 2,100 shares of Universal Security Instruments exchanged hands as compared to its average daily volume of 4,600 shares. The stock ranged in a price between $4.35-$4.37 after having opened the day at $4.37 as compared to the previous trading day's close of $4.16.

Universal Security Instruments, Inc. designs, markets, and distributes safety and security products in the United States and Canada. Universal Security Instruments has a market cap of $9.4 million and is part of the technology sector. Shares are down 3.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Universal Security Instruments a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Universal Security Instruments as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on UUU go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 1695.7% when compared to the same quarter one year ago, falling from $0.02 million to -$0.37 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electrical Equipment industry and the overall market, UNIVERSAL SECURITY INSTRUMNT's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $0.68 million or 45.83% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for UNIVERSAL SECURITY INSTRUMNT is currently lower than what is desirable, coming in at 30.38%. Regardless of UUU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UUU's net profit margin of -9.81% significantly underperformed when compared to the industry average.
  • The share price of UNIVERSAL SECURITY INSTRUMNT has not done very well: it is down 20.51% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

You can view the full analysis from the report here: Universal Security Instruments Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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