3 Stocks Boosting The Utilities Sector 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 68 points (0.4%) at 17,137 as of Friday, Sept. 5, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,903 issues advancing vs. 1,131 declining with 161 unchanged.

The Utilities sector as a whole closed the day up 0.8% versus the S&P 500, which was up 0.5%. Top gainers within the Utilities sector included U S Geothermal ( HTM), up 1.7%, Transportadora de Gas del Sur ( TGS), up 3.8%, Consolidated Water ( CWCO), up 2.5%, Empresa Distribuidora y Comercializadora No ( EDN), up 2.0% and NorthWestern ( NWE), up 2.1%.

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

Consolidated Water ( CWCO) is one of the companies that pushed the Utilities sector higher today. Consolidated Water was up $0.30 (2.5%) to $12.70 on light volume. Throughout the day, 69,792 shares of Consolidated Water exchanged hands as compared to its average daily volume of 176,000 shares. The stock ranged in a price between $12.35-$12.70 after having opened the day at $12.42 as compared to the previous trading day's close of $12.40.

Consolidated Water Co. Ltd., together with its subsidiaries, develops and operates seawater desalination plants and water distribution systems. It operates in three segments: Retail, Bulk, and Services. Consolidated Water has a market cap of $182.8 million and is part of the utilities industry. Shares are down 12.1% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Consolidated Water a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Consolidated Water as a buy. 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on CWCO go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 2.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • CWCO's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.88, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 962.15% to $24.11 million when compared to the same quarter last year. In addition, CONSOLIDATED WATER CO INC has also vastly surpassed the industry average cash flow growth rate of 17.66%.
  • 37.62% is the gross profit margin for CONSOLIDATED WATER CO INC which we consider to be strong. Regardless of CWCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 16.29% trails the industry average.
  • CONSOLIDATED WATER CO INC reported flat earnings per share in the most recent quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CONSOLIDATED WATER CO INC reported lower earnings of $0.58 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 27.6% in earnings ($0.42 versus $0.58).

You can view the full analysis from the report here: Consolidated Water Ratings Report

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At the close, Transportadora de Gas del Sur ( TGS) was up $0.11 (3.8%) to $3.00 on light volume. Throughout the day, 170,160 shares of Transportadora de Gas del Sur exchanged hands as compared to its average daily volume of 380,600 shares. The stock ranged in a price between $2.89-$3.05 after having opened the day at $2.90 as compared to the previous trading day's close of $2.89.

Transportadora de Gas del Sur S.A. operates as a gas transportation company in Latin America. Transportadora de Gas del Sur has a market cap of $462.4 million and is part of the utilities industry. Shares are up 33.2% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Transportadora de Gas del Sur a buy, no analysts rate it a sell, and 1 rates 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 Transportadora de Gas del Sur as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on TGS go as follows:

  • Compared to its closing price of one year ago, TGS's share price has jumped by 37.68%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Net operating cash flow has slightly increased to $61.94 million or 9.98% when compared to the same quarter last year. Despite an increase in cash flow, TRANSPORTADORA DE GAS SUR's cash flow growth rate is still lower than the industry average growth rate of 27.71%.
  • TGS, 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 3.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for TRANSPORTADORA DE GAS SUR is currently lower than what is desirable, coming in at 32.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.26% is significantly below that of the industry average.
  • 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 Gas Utilities industry. The net income has significantly decreased by 143.9% when compared to the same quarter one year ago, falling from $22.29 million to -$9.78 million.

You can view the full analysis from the report here: Transportadora de Gas del Sur 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.

U S Geothermal ( HTM) was another company that pushed the Utilities sector higher today. U S Geothermal was up $0.01 (1.7%) to $0.60 on heavy volume. Throughout the day, 1,409,967 shares of U S Geothermal exchanged hands as compared to its average daily volume of 377,300 shares. The stock ranged in a price between $0.58-$0.61 after having opened the day at $0.60 as compared to the previous trading day's close of $0.59.

U S Geothermal has a market cap of $62.0 million and is part of the utilities industry. Shares are up 55.7% year-to-date as of the close of trading on Thursday.

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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