3 Stocks Improving Performance Of The Telecommunications 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.

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 Telecommunications industry as a whole closed the day up 0.1% versus the S&P 500, which was down 0.1%. Top gainers within the Telecommunications industry included Technical Communications ( TCCO), up 3.1%, Otelco ( OTEL), up 1.6%, Ambient ( AMBT), up 11.8%, RELM Wireless ( RWC), up 4.5% and Ikanos Communications ( IKAN), up 7.4%.

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

Ikanos Communications ( IKAN) is one of the companies that pushed the Telecommunications industry higher today. Ikanos Communications was up $0.03 (7.4%) to $0.47 on light volume. Throughout the day, 122,891 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 294,800 shares. The stock ranged in a price between $0.45-$0.52 after having opened the day at $0.48 as compared to the previous trading day's close of $0.44.

Ikanos Communications, Inc. designs, develops, markets, and sells semiconductors and integrated firmware products for the digital home worldwide. It offers various digital subscriber line (DSL) processors for a range of power carrier infrastructure and customer premises equipment devices. Ikanos Communications has a market cap of $42.0 million and is part of the technology sector. Shares are down 64.6% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Ikanos Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Ikanos Communications 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on IKAN 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 133.3% when compared to the same quarter one year ago, falling from -$4.42 million to -$10.31 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 Semiconductors & Semiconductor Equipment industry and the overall market, IKANOS COMMUNICATIONS 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 -$1.85 million or 270.50% 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 66.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.66% 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.
  • IKANOS COMMUNICATIONS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IKANOS COMMUNICATIONS INC reported poor results of -$0.40 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$0.40).

You can view the full analysis from the report here: Ikanos Communications 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, RELM Wireless ( RWC) was up $0.17 (4.5%) to $3.97 on average volume. Throughout the day, 27,536 shares of RELM Wireless exchanged hands as compared to its average daily volume of 26,100 shares. The stock ranged in a price between $3.70-$3.97 after having opened the day at $3.76 as compared to the previous trading day's close of $3.80.

RELM Wireless Corporation designs, manufactures, and markets wireless communications products under the BK Radio and RELM brand names in the United States and internationally. Its products include two-way land mobile radios, repeaters, base stations, and related components and subsystems. RELM Wireless has a market cap of $53.6 million and is part of the technology sector. Shares are up 16.6% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate RELM Wireless 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 RELM Wireless as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on RWC go as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 10.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • RWC 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. Along with this, the company maintains a quick ratio of 4.13, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 107.29% to $0.14 million when compared to the same quarter last year. In addition, RELM WIRELESS CORP has also vastly surpassed the industry average cash flow growth rate of -10.66%.
  • The net income growth from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income increased by 17.3% when compared to the same quarter one year prior, going from $0.41 million to $0.48 million.
  • Compared to its closing price of one year ago, RWC's share price has jumped by 34.60%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

You can view the full analysis from the report here: RELM Wireless 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.

Ambient ( AMBT) was another company that pushed the Telecommunications industry higher today. Ambient was up $0.11 (11.8%) to $1.03 on average volume. Throughout the day, 55,545 shares of Ambient exchanged hands as compared to its average daily volume of 43,700 shares. The stock ranged in a price between $0.94-$1.13 after having opened the day at $0.94 as compared to the previous trading day's close of $0.92.

Ambient Corporation designs, develops, and sells communications and applications platform for utilities and other grid managers. Ambient has a market cap of $17.9 million and is part of the technology sector. Shares are down 65.4% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Ambient a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Ambient as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on AMBT go as follows:

  • AMBIENT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, AMBIENT CORP reported poor results of -$1.07 versus -$0.33 in the prior year.
  • 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 Communications Equipment industry. The net income has significantly decreased by 256.6% when compared to the same quarter one year ago, falling from -$1.68 million to -$5.98 million.
  • Net operating cash flow has significantly decreased to -$3.59 million or 99.16% 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 31.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 260.00% 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.
  • AMBT, with its very weak revenue results, has greatly underperformed against the industry average of 2.4%. Since the same quarter one year prior, revenues plummeted by 90.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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