3 Stocks Improving Performance Of The Internet 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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 62 points (0.4%) at 17,114 as of Tuesday, July 22, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,161 issues advancing vs. 822 declining with 149 unchanged.

The Internet industry as a whole closed the day up 1.9% versus the S&P 500, which was up 0.5%. Top gainers within the Internet industry included ChinaNet Online Holdings ( CNET), up 9.1%, Net Element ( NETE), up 56.5%, Local ( LOCM), up 2.8%, Jiayuan.com International ( DATE), up 2.6% and Spark Networks ( LOV), up 1.6%.

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

Jiayuan.com International ( DATE) is one of the companies that pushed the Internet industry higher today. Jiayuan.com International was up $0.14 (2.6%) to $5.60 on average volume. Throughout the day, 69,507 shares of Jiayuan.com International exchanged hands as compared to its average daily volume of 86,900 shares. The stock ranged in a price between $5.38-$5.70 after having opened the day at $5.45 as compared to the previous trading day's close of $5.46.

Jiayuan.com International Ltd. operates an online dating platform in the People's Republic of China. It operates through three segments: Online Services, Personalized Matchmaking Services, and Events and Other Services. Jiayuan.com International has a market cap of $178.5 million and is part of the technology sector. Shares are down 10.7% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Jiayuan.com International a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Jiayuan.com International 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on DATE go as follows:

  • DATE's revenue growth has slightly outpaced the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 20.4%. 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.
  • DATE 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. To add to this, DATE has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for JIAYUAN.COM INTL LTD is rather high; currently it is at 60.38%. Regardless of DATE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DATE's net profit margin of -10.35% significantly underperformed when compared to the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet Software & Services industry and the overall market, JIAYUAN.COM INTL LTD's return on equity is below that of both the industry average and the S&P 500.
  • The share price of JIAYUAN.COM INTL LTD has not done very well: it is down 21.60% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

You can view the full analysis from the report here: Jiayuan.com 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.

At the close, Local ( LOCM) was up $0.06 (2.8%) to $2.00 on average volume. Throughout the day, 63,413 shares of Local exchanged hands as compared to its average daily volume of 69,300 shares. The stock ranged in a price between $1.91-$2.07 after having opened the day at $1.98 as compared to the previous trading day's close of $1.94.

Local Corporation, a technology and advertising company, provides search results to consumers who search online for local businesses, products, and services in the United States. The company operates in two segments, Paid Search and Daily Deals. Local has a market cap of $46.5 million and is part of the technology sector. Shares are up 22.8% year-to-date as of the close of trading on Monday. Currently there are 2 analysts who rate Local 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 Local as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on LOCM go as follows:

  • The gross profit margin for LOCAL CORP is currently lower than what is desirable, coming in at 25.42%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.80% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$0.73 million or 168.77% 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 Internet Software & Services industry and the overall market, LOCAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • LOCM's debt-to-equity ratio of 0.79 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 0.80 is weak.
  • Investors have driven up the company's shares by 25.15% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in LOCM 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: Local 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.

ChinaNet Online Holdings ( CNET) was another company that pushed the Internet industry higher today. ChinaNet Online Holdings was up $0.06 (9.1%) to $0.72 on light volume. Throughout the day, 16,303 shares of ChinaNet Online Holdings exchanged hands as compared to its average daily volume of 39,100 shares. The stock ranged in a price between $0.66-$0.75 after having opened the day at $0.68 as compared to the previous trading day's close of $0.66.

ChinaNet Online Holdings, Inc., through its subsidiaries, provides business-to-businesses Internet services for small and medium enterprises (SMEs) sales networks in the People's Republic of China. ChinaNet Online Holdings has a market cap of $17.2 million and is part of the technology sector. Shares are down 21.4% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate ChinaNet Online Holdings a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates ChinaNet Online Holdings 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, disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on CNET go as follows:

  • CHINANET ONLINE HOLDINGS 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, CHINANET ONLINE HOLDINGS swung to a loss, reporting -$0.01 versus $0.13 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 Media industry. The net income has significantly decreased by 248.9% when compared to the same quarter one year ago, falling from $1.25 million to -$1.86 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 Media industry and the overall market, CHINANET ONLINE HOLDINGS'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 -$0.06 million or 102.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 49.93% is the gross profit margin for CHINANET ONLINE HOLDINGS which we consider to be strong. Regardless of CNET's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CNET's net profit margin of -27.02% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: ChinaNet Online 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.

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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