3 Stocks Improving Performance Of The Retail Industry

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.

The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 35 points (0.2%) at 16,753 as of Monday, June 2, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,422 issues advancing vs. 1,555 declining with 186 unchanged.

The Retail industry as a whole closed the day down 0.8% versus the S&P 500, which was unchanged. Top gainers within the Retail industry included Appliance Recycling Centers Of America ( ARCI), up 7.0%, dELiA*s ( DLIA), up 1.8%, Wet Seal ( WTSL), up 5.9% and Sears Hometown & Outlet Stores ( SHOS), up 2.9%.

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

Wet Seal ( WTSL) is one of the companies that pushed the Retail industry higher today. Wet Seal was up $0.05 (5.9%) to $0.89 on light volume. Throughout the day, 921,744 shares of Wet Seal exchanged hands as compared to its average daily volume of 1,755,700 shares. The stock ranged in a price between $0.85-$0.90 after having opened the day at $0.85 as compared to the previous trading day's close of $0.84.

The Wet Seal, Inc., a multi-channel specialty retailer, operates stores that sell fashionable and contemporary apparel and accessory items for female consumers. It operates in two segments, Wet Seal and Arden B. Wet Seal has a market cap of $72.9 million and is part of the services sector. Shares are down 69.2% year-to-date as of the close of trading on Friday. Currently there are 2 analysts who rate Wet Seal a buy, 1 analyst rates it a sell, and 2 rate it a hold.

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

Highlights from TheStreet Ratings analysis on WTSL 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 Specialty Retail industry. The net income has significantly decreased by 800.4% when compared to the same quarter one year ago, falling from $3.11 million to -$21.78 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 Specialty Retail industry and the overall market, WET SEAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WET SEAL INC is rather low; currently it is at 22.33%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.65% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$14.50 million or 258.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 82.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 966.66% compared to 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.

You can view the full analysis from the report here: Wet Seal 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, dELiA*s ( DLIA) was up $0.01 (1.8%) to $0.70 on light volume. Throughout the day, 215,768 shares of dELiA*s exchanged hands as compared to its average daily volume of 853,400 shares. The stock ranged in a price between $0.66-$0.73 after having opened the day at $0.68 as compared to the previous trading day's close of $0.69.

dELiA*s, Inc. operates as a multi-channel retail company, primarily marketing to teenage girls in the United States. The company sells various product categories to consumers through its Website, direct mail catalogs, and retail stores. dELiA*s has a market cap of $51.8 million and is part of the services sector. Shares are down 16.8% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate dELiA*s a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates dELiA*s as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on DLIA 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 Internet & Catalog Retail industry. The net income has significantly decreased by 26.0% when compared to the same quarter one year ago, falling from -$9.22 million to -$11.61 million.
  • The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, DLIA has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 & Catalog Retail industry and the overall market, DELIAS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for DELIAS INC is currently lower than what is desirable, coming in at 27.59%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -44.78% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to -$14.91 million or 4.19% 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.

You can view the full analysis from the report here: dELiA*s 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.

Appliance Recycling Centers Of America ( ARCI) was another company that pushed the Retail industry higher today. Appliance Recycling Centers Of America was up $0.27 (7.0%) to $4.15 on heavy volume. Throughout the day, 152,332 shares of Appliance Recycling Centers Of America exchanged hands as compared to its average daily volume of 42,600 shares. The stock ranged in a price between $3.96-$4.33 after having opened the day at $3.96 as compared to the previous trading day's close of $3.88.

Appliance Recycling Centers of America, Inc., together with its subsidiaries, sells new household appliances through a chain of company-owned retail stores under the ApplianceSmart name. The company operates in two segments, Recycling and Retail. Appliance Recycling Centers Of America has a market cap of $20.6 million and is part of the services sector. Shares are up 28.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Appliance Recycling Centers Of America a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Appliance Recycling Centers Of America as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. 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 ARCI go as follows:

  • The revenue growth came in higher than the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 10.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 466.66% and other important driving factors, this stock has surged by 82.26% 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.
  • APPLIANCE RECYCLING CTR AMER 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. During the past fiscal year, APPLIANCE RECYCLING CTR AMER turned its bottom line around by earning $0.57 versus -$0.69 in the prior year.
  • ARCI's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.70 is weak.
  • The gross profit margin for APPLIANCE RECYCLING CTR AMER is currently lower than what is desirable, coming in at 28.20%. Regardless of ARCI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.89% trails the industry average.

You can view the full analysis from the report here: Appliance Recycling Centers Of America 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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