3 Stocks Moving The Internet 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 27 points (0.2%) at 16,518 as of Monday, May 19, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,874 issues advancing vs. 1,111 declining with 157 unchanged.

The Internet industry as a whole closed the day up 1.1% versus the S&P 500, which was up 0.4%. Top gainers within the Internet industry included Internet Initiative Japan ( IIJI), up 3.6%, SMTP ( SMTP), up 2.8%, Limelight Networks ( LLNW), up 2.6%, support.com ( SPRT), up 1.8% and Points International ( PCOM), up 4.1%.

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

Limelight Networks ( LLNW) is one of the companies that pushed the Internet industry higher today. Limelight Networks was up $0.06 (2.6%) to $2.14 on light volume. Throughout the day, 154,637 shares of Limelight Networks exchanged hands as compared to its average daily volume of 298,300 shares. The stock ranged in a price between $2.09-$2.17 after having opened the day at $2.09 as compared to the previous trading day's close of $2.09.

Limelight Networks, Inc. provides content delivery and related services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Limelight Networks has a market cap of $203.9 million and is part of the technology sector. Shares are up 5.6% year-to-date as of the close of trading on Friday. Currently there are 2 analysts who rate Limelight Networks a buy, 1 analyst rates it a sell, and 3 rate it a hold.

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TheStreet Ratings rates Limelight Networks as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LLNW 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 Internet Software & Services industry and the overall market, LIMELIGHT NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.09 million or 178.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, LLNW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • LIMELIGHT NETWORKS INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIMELIGHT NETWORKS INC reported poor results of -$0.36 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.24 versus -$0.36).
  • The revenue fell significantly faster than the industry average of 21.3%. Since the same quarter one year prior, revenues fell by 10.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

You can view the full analysis from the report here: Limelight Networks 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, SMTP ( SMTP) was up $0.17 (2.8%) to $6.25 on light volume. Throughout the day, 6,164 shares of SMTP exchanged hands as compared to its average daily volume of 18,800 shares. The stock ranged in a price between $6.08-$6.25 after having opened the day at $6.09 as compared to the previous trading day's close of $6.08.

SMTP, Inc. provides Internet-based services to facilitate email delivery worldwide. It offers services to enable businesses of various scales to outsource the sending of outbound emails. SMTP has a market cap of $31.1 million and is part of the technology sector. Shares are up 325.2% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate SMTP 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 SMTP 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 revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on SMTP go as follows:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • SMTP INC has improved earnings per share by 20.0% 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. During the past fiscal year, SMTP INC increased its bottom line by earning $0.42 versus $0.35 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 10.0% when compared to the same quarter one year prior, going from $0.31 million to $0.34 million.
  • 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 Internet Software & Services industry and the overall market, SMTP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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

Internet Initiative Japan ( IIJI) was another company that pushed the Internet industry higher today. Internet Initiative Japan was up $0.43 (3.6%) to $12.24 on light volume. Throughout the day, 4,029 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 9,000 shares. The stock ranged in a price between $12.09-$12.26 after having opened the day at $12.20 as compared to the previous trading day's close of $11.81.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $1.1 billion and is part of the technology sector. Shares are down 14.8% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Internet Initiative Japan a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Internet Initiative Japan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • IIJI's revenue growth trails the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 1.5%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.30 is sturdy.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 47.4% when compared to the same quarter one year ago, falling from $10.16 million to $5.35 million.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, INTERNET INITIATIVE JAPAN INC's return on equity is below that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Internet Initiative Japan 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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