3 Stocks Advancing The Electronics 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 13 points (0.1%) at 16,969 as of Wednesday, July 2, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,178 issues advancing vs. 1,877 declining with 123 unchanged.

The Electronics industry as a whole closed the day up 0.2% versus the S&P 500, which was unchanged. Top gainers within the Electronics industry included Vicon Industries ( VII), up 2.0%, Nortech Systems ( NSYS), up 1.9%, Pulse Electronics ( PULS), up 9.4%, BTU International ( BTUI), up 5.4% and Aehr Test Systems ( AEHR), up 10.7%.

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

Aehr Test Systems ( AEHR) is one of the companies that pushed the Electronics industry higher today. Aehr Test Systems was up $0.23 (10.7%) to $2.39 on average volume. Throughout the day, 16,694 shares of Aehr Test Systems exchanged hands as compared to its average daily volume of 12,100 shares. The stock ranged in a price between $2.16-$2.49 after having opened the day at $2.20 as compared to the previous trading day's close of $2.16.

Aehr Test Systems designs, engineers, develops, manufactures, and sells test and burn-in equipment used in the semiconductor industry worldwide. Aehr Test Systems has a market cap of $23.7 million and is part of the basic materials sector. Shares are down 30.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Aehr Test Systems a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Aehr Test Systems as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from TheStreet Ratings analysis on AEHR go as follows:

  • Net operating cash flow has significantly decreased to -$0.60 million or 165.22% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AEHR TEST SYSTEMS's return on equity significantly trails that of both the industry average and the S&P 500.
  • AEHR's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • The gross profit margin for AEHR TEST SYSTEMS is rather high; currently it is at 51.57%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, AEHR's net profit margin of 3.77% significantly trails the industry average.
  • This stock has increased by 62.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in AEHR do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

You can view the full analysis from the report here: Aehr Test 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.

At the close, BTU International ( BTUI) was up $0.17 (5.4%) to $3.30 on heavy volume. Throughout the day, 21,340 shares of BTU International exchanged hands as compared to its average daily volume of 8,200 shares. The stock ranged in a price between $3.14-$3.34 after having opened the day at $3.14 as compared to the previous trading day's close of $3.13.

BTU International, Inc. designs, manufactures, sells, and services thermal processing equipment and related process controls for use in the electronics, alternative energy, automotive, and other industries worldwide. BTU International has a market cap of $31.3 million and is part of the basic materials sector. Shares are up 4.0% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate BTU International 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 BTU International as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on BTUI 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 Semiconductors & Semiconductor Equipment industry and the overall market, BTU INTERNATIONAL 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 -$2.70 million or 56.59% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BTU INTERNATIONAL INC has improved earnings per share by 42.4% 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, BTU INTERNATIONAL INC reported poor results of -$1.21 versus -$1.16 in the prior year.
  • Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BTUI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
  • 38.34% is the gross profit margin for BTU INTERNATIONAL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.28% is in-line with the industry average.

You can view the full analysis from the report here: BTU International 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.

Pulse Electronics ( PULS) was another company that pushed the Electronics industry higher today. Pulse Electronics was up $0.24 (9.4%) to $2.78 on heavy volume. Throughout the day, 26,749 shares of Pulse Electronics exchanged hands as compared to its average daily volume of 10,100 shares. The stock ranged in a price between $2.54-$2.86 after having opened the day at $2.54 as compared to the previous trading day's close of $2.54.

Pulse Electronics Corporation produces and sells precision-engineered electronic components and modules. It operates in three segments: Network, Power, and Wireless. Pulse Electronics has a market cap of $43.0 million and is part of the basic materials sector. Shares are down 12.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Pulse Electronics a buy, no analysts rate it a sell, and none rate it a hold.

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

Highlights from TheStreet Ratings analysis on PULS 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 27.1% when compared to the same quarter one year ago, falling from -$7.12 million to -$9.05 million.
  • The gross profit margin for PULSE ELECTRONICS CORP is rather low; currently it is at 23.67%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.07% is significantly below that of the industry average.
  • PULS has underperformed the S&P 500 Index, declining 10.28% from its price level of one year ago. 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.
  • PULS, with its decline in revenue, underperformed when compared the industry average of 9.0%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has slightly increased to -$2.59 million or 9.89% when compared to the same quarter last year. Despite an increase in cash flow of 9.89%, PULSE ELECTRONICS CORP is still growing at a significantly lower rate than the industry average of 69.38%.

You can view the full analysis from the report here: Pulse Electronics 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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