3 Computer Software & Services Stocks Pushing Industry Growth

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 32 points (0.2%) at 16,953 as of Friday, June 20, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,583 issues advancing vs. 1,400 declining with 164 unchanged.

The Computer Software & Services industry as a whole was unchanged today versus the S&P 500, which was up 0.2%. Top gainers within the Computer Software & Services industry included Vicon Industries ( VII), up 2.4%, Peerless Systems ( PRLS), up 3.0%, Cover-All Technologies ( COVR), up 8.0%, TigerLogic ( TIGR), up 2.3% and Bsquare ( BSQR), up 1.6%.

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

Bsquare ( BSQR) is one of the companies that pushed the Computer Software & Services industry higher today. Bsquare was up $0.05 (1.6%) to $3.25 on light volume. Throughout the day, 8,263 shares of Bsquare exchanged hands as compared to its average daily volume of 11,400 shares. The stock ranged in a price between $3.22-$3.38 after having opened the day at $3.22 as compared to the previous trading day's close of $3.20.

BSQUARE Corporation provides software solutions and related engineering services to companies that develop smart connected systems in North America, Asia, Europe, and internationally. Bsquare has a market cap of $37.9 million and is part of the technology sector. Shares are down 7.8% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Bsquare a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Bsquare as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on BSQR go as follows:

  • 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 Software industry and the overall market, BSQUARE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BSQUARE CORP is rather low; currently it is at 16.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.72% is significantly below that of the industry average.
  • BSQUARE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BSQUARE CORP swung to a loss, reporting -$0.47 versus $0.07 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 54.4% when compared to the same quarter one year prior, rising from -$0.86 million to -$0.39 million.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.

You can view the full analysis from the report here: Bsquare 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, Cover-All Technologies ( COVR) was up $0.10 (8.0%) to $1.35 on light volume. Throughout the day, 12,697 shares of Cover-All Technologies exchanged hands as compared to its average daily volume of 17,400 shares. The stock ranged in a price between $1.25-$1.36 after having opened the day at $1.34 as compared to the previous trading day's close of $1.25.

Cover-All Technologies Inc., through its subsidiary, Cover-All Systems, Inc., licenses and maintains software products for the property/casualty insurance industry in the United States and Puerto Rico. Cover-All Technologies has a market cap of $35.2 million and is part of the technology sector. Shares are down 10.7% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Cover-All Technologies 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 Cover-All Technologies as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on COVR 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 Software industry. The net income has significantly decreased by 38.4% when compared to the same quarter one year ago, falling from $0.71 million to $0.43 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, COVER-ALL TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, COVR 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.
  • COVER-ALL TECHNOLOGIES INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, COVER-ALL TECHNOLOGIES INC continued to lose money by earning -$0.10 versus -$0.20 in the prior year.
  • The revenue fell significantly faster than the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 24.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

You can view the full analysis from the report here: Cover-All Technologies 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.

Peerless Systems ( PRLS) was another company that pushed the Computer Software & Services industry higher today. Peerless Systems was up $0.10 (3.0%) to $3.66 on average volume. Throughout the day, 5,912 shares of Peerless Systems exchanged hands as compared to its average daily volume of 4,700 shares. The stock ranged in a price between $3.53-$3.74 after having opened the day at $3.53 as compared to the previous trading day's close of $3.56.

Peerless Systems Corporation develops and licenses software-based digital imaging and networking systems and supporting electronic technologies to original equipment manufacturers (OEMs) of digital document products located primarily in the United States and Japan. Peerless Systems has a market cap of $9.6 million and is part of the technology sector. Shares are down 2.1% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Peerless Systems a buy, no analysts rate it a sell, and none rate it a hold.

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

Highlights from TheStreet Ratings analysis on PRLS go as follows:

  • PRLS's very impressive revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues leaped by 90.9%. 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.
  • PRLS 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 36.47, which clearly demonstrates the ability to cover short-term cash needs.
  • PEERLESS SYSTEMS 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. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PEERLESS SYSTEMS CORP increased its bottom line by earning $0.54 versus $0.40 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 Software industry. The net income has significantly decreased by 118.6% when compared to the same quarter one year ago, falling from $1.40 million to -$0.26 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 Software industry and the overall market, PEERLESS SYSTEMS CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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