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.

Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 38.27 points (-0.2%) at 17,001 as of Friday, Aug. 22, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,124 issues advancing vs. 1,881 declining with 171 unchanged.

The Telecommunications industry as a whole closed the day up 0.3% versus the S&P 500, which was down 0.2%. Top gainers within the Telecommunications industry included RIT Technologies ( RITT), up 3.4%, Technical Communications ( TCCO), up 1.5%, Ikanos Communications ( IKAN), up 12.5%, Hong Kong Television Network ( HKTV), up 2.8% and UTStarcom Holdings ( UTSI), up 3.8%.

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

UTStarcom Holdings ( UTSI) is one of the companies that pushed the Telecommunications industry higher today. UTStarcom Holdings was up $0.11 (3.8%) to $2.98 on heavy volume. Throughout the day, 87,479 shares of UTStarcom Holdings exchanged hands as compared to its average daily volume of 38,500 shares. The stock ranged in a price between $2.84-$3.02 after having opened the day at $2.84 as compared to the previous trading day's close of $2.87.

UTStarcom Holdings Corp., together with its subsidiaries, operates as a telecom infrastructure provider to develop technology for bandwidth from cloud-based services, mobile, streaming, and other applications. UTStarcom Holdings has a market cap of $113.4 million and is part of the technology sector. Shares are up 3.6% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates UTStarcom Holdings a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates UTStarcom Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and poor profit margins.

Highlights from TheStreet Ratings analysis on UTSI 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 Communications Equipment industry. The net income has significantly decreased by 118.1% when compared to the same quarter one year ago, falling from -$2.10 million to -$4.59 million.
  • Net operating cash flow has significantly decreased to -$3.47 million or 218.05% 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 gross profit margin for UTSTARCOM HOLDINGS CORP is rather low; currently it is at 22.11%. Regardless of UTSI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UTSI's net profit margin of -14.38% significantly underperformed when compared to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, UTSTARCOM HOLDINGS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, UTSI 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

You can view the full analysis from the report here: UTStarcom Holdings Ratings Report

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At the close, Ikanos Communications ( IKAN) was up $0.04 (12.5%) to $0.36 on average volume. Throughout the day, 176,990 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 189,100 shares. The stock ranged in a price between $0.32-$0.36 after having opened the day at $0.33 as compared to the previous trading day's close of $0.32.

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 $30.8 million and is part of the technology sector. Shares are down 73.3% year-to-date as of the close of trading on Thursday. 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 73.63%, 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 9.0%. 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.

RIT Technologies ( RITT) was another company that pushed the Telecommunications industry higher today. RIT Technologies was up $0.04 (3.4%) to $1.23 on heavy volume. Throughout the day, 88,297 shares of RIT Technologies exchanged hands as compared to its average daily volume of 25,800 shares. The stock ranged in a price between $1.10-$1.46 after having opened the day at $1.20 as compared to the previous trading day's close of $1.19.

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 $11.7 million and is part of the technology sector. Shares are down 32.4% year-to-date as of the close of trading on Thursday. 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. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on RITT 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 Communications Equipment industry. The net income has significantly decreased by 62.4% when compared to the same quarter one year ago, falling from -$1.60 million to -$2.59 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 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.
  • The gross profit margin for RIT TECHNOLOGIES LTD is currently lower than what is desirable, coming in at 31.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -154.77% is significantly below that of the industry average.
  • Looking at the price performance of RITT's shares over the past 12 months, there is not much good news to report: the stock is down 65.34%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • RIT TECHNOLOGIES LTD's earnings per share declined by 11.1% 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, 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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