3 Computer Hardware Stocks Driving The Industry Higher

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.

Two out of the three major indices traded up today The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 17 points (0.1%) at 16,712 as of Tuesday, May 13, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,351 issues advancing vs. 1,650 declining with 150 unchanged.

The Computer Hardware industry as a whole closed the day down 0.2% versus the S&P 500, which was up 0.1%. Top gainers within the Computer Hardware industry included Xplore Technologies ( XPLR), up 2.8%, Crossroads Systems ( CRDS), up 8.1%, Lantronix ( LTRX), up 4.3%, China TechFaith Wireless Comm Tech ( CNTF), up 2.4% and Quantum ( QTM), up 2.7%.

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

China TechFaith Wireless Comm Tech ( CNTF) is one of the companies that pushed the Computer Hardware industry higher today. China TechFaith Wireless Comm Tech was up $0.04 (2.4%) to $1.73 on light volume. Throughout the day, 27,124 shares of China TechFaith Wireless Comm Tech exchanged hands as compared to its average daily volume of 396,700 shares. The stock ranged in a price between $1.69-$1.75 after having opened the day at $1.69 as compared to the previous trading day's close of $1.69.

China Techfaith Wireless Communication Technology Limited engages in the original design, development, and sale of handsets. China TechFaith Wireless Comm Tech has a market cap of $86.3 million and is part of the technology sector. Shares are down 2.4% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate China TechFaith Wireless Comm Tech a buy, no analysts rate it a sell, and none rate it a hold.

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

TheStreet Ratings rates China TechFaith Wireless Comm Tech as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on CNTF go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Computers & Peripherals industry average, but is less than that of the S&P 500. The net income increased by 32.2% when compared to the same quarter one year prior, rising from -$3.04 million to -$2.06 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CHINA TECHFAITH WIRELESS-ADR has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, CHINA TECHFAITH WIRELESS-ADR continued to lose money by earning -$0.05 versus -$0.06 in the prior year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market, CHINA TECHFAITH WIRELESS-ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINA TECHFAITH WIRELESS-ADR is rather low; currently it is at 15.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.40% is significantly below that of the industry average.

You can view the full analysis from the report here: China TechFaith Wireless Comm Tech 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, Lantronix ( LTRX) was up $0.08 (4.3%) to $1.85 on light volume. Throughout the day, 18,403 shares of Lantronix exchanged hands as compared to its average daily volume of 137,500 shares. The stock ranged in a price between $1.78-$1.85 after having opened the day at $1.78 as compared to the previous trading day's close of $1.77.

Lantronix, Inc. designs, develops, markets, and sells networking and communications products with a focus on the convergence of mobility with machine-to-machine systems. The company provides solutions that enable machines, devices, and sensors to be securely accessed, managed, and controlled. Lantronix has a market cap of $26.2 million and is part of the technology sector. Shares are up 13.1% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Lantronix a buy, no analysts rate it a sell, and none rate it a hold.

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

TheStreet Ratings rates Lantronix as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from TheStreet Ratings analysis on LTRX go as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, LANTRONIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • LTRX, with its decline in revenue, slightly underperformed the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The gross profit margin for LANTRONIX INC is rather high; currently it is at 51.94%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.12% is in-line with the industry average.
  • LANTRONIX 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LANTRONIX INC continued to lose money by earning -$0.19 versus -$0.28 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.19).

You can view the full analysis from the report here: Lantronix 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.

Crossroads Systems ( CRDS) was another company that pushed the Computer Hardware industry higher today. Crossroads Systems was up $0.15 (8.1%) to $2.00 on light volume. Throughout the day, 66,080 shares of Crossroads Systems exchanged hands as compared to its average daily volume of 113,600 shares. The stock ranged in a price between $1.80-$2.04 after having opened the day at $1.80 as compared to the previous trading day's close of $1.85.

Crossroads Systems has a market cap of $21.6 million and is part of the technology sector. Shares are down 23.2% year-to-date as of the close of trading on Monday.

Highlights from TheStreet Ratings analysis on CRDS go as follows:

You can view the full analysis from the report here: Crossroads Systems 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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