3 Diversified 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.

One out of the three major indices traded up today Two out of the three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 17 points (0.1%) at 16,447 as of Wednesday, Aug. 6, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 1,883 issues advancing vs. 1,122 declining with 133 unchanged.

The Diversified Services industry as a whole closed the day up 0.3% versus the S&P 500, which was unchanged. Top gainers within the Diversified Services industry included Spar Group ( SGRP), up 9.1%, RLJ Entertainment ( RLJE), up 4.4%, Universal Security Instruments ( UUU), up 5.3%, Command Security ( MOC), up 7.0% and Onvia ( ONVI), up 5.4%.

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

Universal Security Instruments ( UUU) is one of the companies that pushed the Diversified Services industry higher today. Universal Security Instruments was up $0.20 (5.3%) to $4.00 on heavy volume. Throughout the day, 7,151 shares of Universal Security Instruments exchanged hands as compared to its average daily volume of 4,700 shares. The stock ranged in a price between $3.69-$4.02 after having opened the day at $3.69 as compared to the previous trading day's close of $3.80.

Universal Security Instruments, Inc. designs, markets, and distributes safety and security products in the United States and Canada. Universal Security Instruments has a market cap of $8.4 million and is part of the services sector. Shares are down 15.7% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Universal Security Instruments a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Universal Security Instruments 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, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on UUU 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 Electrical Equipment industry. The net income has significantly decreased by 1695.7% when compared to the same quarter one year ago, falling from $0.02 million to -$0.37 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 Electrical Equipment industry and the overall market, UNIVERSAL SECURITY INSTRUMNT's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $0.68 million or 45.83% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for UNIVERSAL SECURITY INSTRUMNT is currently lower than what is desirable, coming in at 30.38%. Regardless of UUU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UUU's net profit margin of -9.81% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1700.00% 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.

You can view the full analysis from the report here: Universal Security Instruments 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, RLJ Entertainment ( RLJE) was up $0.15 (4.4%) to $3.55 on light volume. Throughout the day, 201 shares of RLJ Entertainment exchanged hands as compared to its average daily volume of 4,900 shares. The stock ranged in a price between $3.55-$3.55 after having opened the day at $3.55 as compared to the previous trading day's close of $3.40.

RLJ Entertainment, Inc., an entertainment company, acquires content rights in British episodic mystery and drama, urban programming, and full-length motion pictures. It operates through three segments: Intellectual Property Licensing, Wholesale, and Direct-to-Consumer. RLJ Entertainment has a market cap of $45.2 million and is part of the services sector. Shares are down 29.0% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate RLJ Entertainment 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 RLJ Entertainment 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, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RLJE go as follows:

  • RLJ ENTERTAINMENT 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. During the past fiscal year, RLJ ENTERTAINMENT INC reported poor results of -$2.30 versus -$0.49 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 183.1% when compared to the same quarter one year ago, falling from -$3.56 million to -$10.07 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 Media industry and the overall market, RLJ ENTERTAINMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RLJ ENTERTAINMENT INC is rather low; currently it is at 20.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -33.26% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% 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.

You can view the full analysis from the report here: RLJ Entertainment 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.

Spar Group ( SGRP) was another company that pushed the Diversified Services industry higher today. Spar Group was up $0.12 (9.1%) to $1.45 on light volume. Throughout the day, 7,944 shares of Spar Group exchanged hands as compared to its average daily volume of 11,200 shares. The stock ranged in a price between $1.38-$1.45 after having opened the day at $1.38 as compared to the previous trading day's close of $1.33.

SPAR Group Inc., together with its subsidiaries, provides merchandising and other marketing services worldwide. Spar Group has a market cap of $29.3 million and is part of the services sector. Shares are down 28.3% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Spar Group a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Spar Group as a hold. 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 and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from TheStreet Ratings analysis on SGRP go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 12.2%. 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.
  • SGRP's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SGRP has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPAR GROUP INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, SPAR GROUP INC increased its bottom line by earning $0.15 versus $0.13 in the prior year.
  • Net operating cash flow has significantly decreased to $2.47 million or 50.56% 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, 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 938.6% when compared to the same quarter one year ago, falling from $0.04 million to -$0.37 million.

You can view the full analysis from the report here: Spar Group 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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