3 Diversified Services Stocks Nudging 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 are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 6.20 points (0.0%) at 16,937 as of Tuesday, June 10, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 968 issues advancing vs. 2,021 declining with 151 unchanged.

The Diversified Services industry as a whole was unchanged today versus the S&P 500, which was down 0.1%. Top gainers within the Diversified Services industry included Kelly Services ( KELYB), up 2.3%, VirtualScopics ( VSCP), up 3.7%, DLH Holdings ( DLHC), up 8.5%, NV5 Holdings ( NVEE), up 2.2% and China HGS Real Estate ( HGSH), up 2.4%.

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

China HGS Real Estate ( HGSH) is one of the companies that pushed the Diversified Services industry higher today. China HGS Real Estate was up $0.10 (2.4%) to $4.28 on light volume. Throughout the day, 3,860 shares of China HGS Real Estate exchanged hands as compared to its average daily volume of 12,200 shares. The stock ranged in a price between $4.12-$4.39 after having opened the day at $4.24 as compared to the previous trading day's close of $4.18.

China HGS Real Estate, Inc., through its subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd, develops real estate properties in the People's Republic of China. It is involved in the construction and sale of residential apartments, parking lots, and commercial properties. China HGS Real Estate has a market cap of $190.6 million and is part of the services sector. Shares are down 29.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate China HGS Real Estate a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates China HGS Real Estate as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from TheStreet Ratings analysis on HGSH go as follows:

  • HGSH's very impressive revenue growth greatly exceeded the industry average of 39.8%. Since the same quarter one year prior, revenues leaped by 157.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CHINA HGS REAL ESTATE 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. During the past fiscal year, CHINA HGS REAL ESTATE INC increased its bottom line by earning $0.46 versus $0.11 in the prior year.
  • HGSH's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.13 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The gross profit margin for CHINA HGS REAL ESTATE INC is currently lower than what is desirable, coming in at 33.12%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 28.67% has significantly outperformed against the industry average.
  • Net operating cash flow has significantly decreased to -$3.65 million or 2084.23% 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: China HGS Real Estate 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, NV5 Holdings ( NVEE) was up $0.23 (2.2%) to $10.43 on heavy volume. Throughout the day, 13,457 shares of NV5 Holdings exchanged hands as compared to its average daily volume of 2,400 shares. The stock ranged in a price between $10.25-$11.49 after having opened the day at $10.45 as compared to the previous trading day's close of $10.20.

NV5 Holdings has a market cap of $57.3 million and is part of the services sector. Shares are up 25.3% year-to-date as of the close of trading on Monday.

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

Highlights from TheStreet Ratings analysis on NVEE go as follows:

You can view the full analysis from the report here: NV5 Holdings 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.

VirtualScopics ( VSCP) was another company that pushed the Diversified Services industry higher today. VirtualScopics was up $0.15 (3.7%) to $4.25 on light volume. Throughout the day, 1,751 shares of VirtualScopics exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in a price between $4.22-$4.26 after having opened the day at $4.26 as compared to the previous trading day's close of $4.10.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $12.7 million and is part of the services sector. Shares are up 18.5% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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

Highlights from TheStreet Ratings analysis on VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to the industry average.
  • VSCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.91%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 19.1%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Life Sciences Tools & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from -$1.11 million to -$0.65 million.

You can view the full analysis from the report here: VirtualScopics 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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