3 Telecommunications Stocks Pushing The Industry Higher

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 18 points (0.1%) at 16,572 as of Monday, Aug. 11, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,374 issues advancing vs. 630 declining with 131 unchanged.

The Telecommunications industry as a whole closed the day up 0.7% versus the S&P 500, which was up 0.3%. Top gainers within the Telecommunications industry included RIT Technologies ( RITT), up 7.8%, Optical Cable ( OCC), up 2.4%, Technical Communications ( TCCO), up 7.1%, Internet Initiative Japan ( IIJI), up 3.9% and Ikanos Communications ( IKAN), up 4.6%.

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 $0.02 (4.6%) to $0.38 on light volume. Throughout the day, 42,138 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 217,100 shares. The stock ranged in a price between $0.36-$0.38 after having opened the day at $0.36 as compared to the previous trading day's close of $0.36.

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 $35.6 million and is part of the technology sector. Shares are down 70.0% year-to-date as of the close of trading on Friday. 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 and generally disappointing historical performance in the stock itself.

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 42.2% when compared to the same quarter one year ago, falling from -$8.67 million to -$12.33 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.
  • IKAN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 72.10%, which is also worse than the performance of the S&P 500 Index. 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 reported flat earnings per share in the most recent quarter. 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).
  • The revenue fell significantly faster than the industry average of 8.9%. Since the same quarter one year prior, revenues fell by 41.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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, Internet Initiative Japan ( IIJI) was up $0.41 (3.9%) to $10.93 on average volume. Throughout the day, 6,774 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 4,800 shares. The stock ranged in a price between $10.93-$11.04 after having opened the day at $11.03 as compared to the previous trading day's close of $10.52.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $952.6 million and is part of the technology sector. Shares are down 23.7% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Internet Initiative Japan a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Internet Initiative Japan as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • The revenue growth came in higher than the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 33.0%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.28 is sturdy.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, INTERNET INITIATIVE JAPAN INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 32.00% compared to the year-earlier quarter. Despite the heavy decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

You can view the full analysis from the report here: Internet Initiative Japan 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.

RIT Technologies ( RITT) was another company that pushed the Telecommunications industry higher today. RIT Technologies was up $0.09 (7.8%) to $1.24 on light volume. Throughout the day, 13,862 shares of RIT Technologies exchanged hands as compared to its average daily volume of 25,900 shares. The stock ranged in a price between $1.14-$1.24 after having opened the day at $1.14 as compared to the previous trading day's close of $1.15.

RiT Technologies Ltd. provides intelligent infrastructure management (IIM) and indoor optical wireless technology solutions. Its IIM products enhance security and network utilization for data centers, communication rooms, and work space environments. RIT Technologies has a market cap of $14.7 million and is part of the technology sector. Shares are down 34.7% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate RIT Technologies a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates RIT Technologies as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RITT go as follows:

  • RITT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 61.93%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • 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 Communications Equipment industry and the overall market, RIT TECHNOLOGIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.35, 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 RITT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.89 is high and demonstrates strong liquidity.
  • 40.28% is the gross profit margin for RIT TECHNOLOGIES LTD 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 -93.84% is in-line with the industry average.
  • RIT TECHNOLOGIES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, RIT TECHNOLOGIES LTD continued to lose money by earning -$1.05 versus -$1.92 in the prior year.

You can view the full analysis from the report here: RIT 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.

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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