3 Stocks Moving The Internet Industry Upward

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 55 points (0.3%) at 17,069 as of Wednesday, Sept. 10, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,628 issues advancing vs. 1,421 declining with 145 unchanged.

The Internet industry as a whole closed the day up 1.0% versus the S&P 500, which was up 0.4%. Top gainers within the Internet industry included Innodata ( INOD), up 2.3%, Local ( LOCM), up 4.3%, Net Element ( NETE), up 119.7%, Limelight Networks ( LLNW), up 9.1% and Tremor Video ( TRMR), up 1.9%.

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

Limelight Networks ( LLNW) is one of the companies that pushed the Internet industry higher today. Limelight Networks was up $0.20 (9.1%) to $2.41 on heavy volume. Throughout the day, 527,561 shares of Limelight Networks exchanged hands as compared to its average daily volume of 334,800 shares. The stock ranged in a price between $2.16-$2.46 after having opened the day at $2.22 as compared to the previous trading day's close of $2.21.

Limelight Networks, Inc. provides content delivery and related services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Limelight Networks has a market cap of $221.4 million and is part of the technology sector. Shares are up 13.6% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates Limelight Networks a buy, 1 analyst rates it a sell, and 3 rate it a hold.

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TheStreet Ratings rates Limelight Networks as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow.

Highlights from TheStreet Ratings analysis on LLNW go as follows:

  • 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. Compared to other companies in the Internet Software & Services industry and the overall market, LIMELIGHT NETWORKS INC'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 $1.50 million or 67.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • LLNW, with its decline in revenue, underperformed when compared the industry average of 19.9%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • LIMELIGHT NETWORKS INC has improved earnings per share by 41.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIMELIGHT NETWORKS INC reported poor results of -$0.36 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.21 versus -$0.36).

You can view the full analysis from the report here: Limelight Networks 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 $0.08 (4.3%) to $1.95 on average volume. Throughout the day, 68,931 shares of Local exchanged hands as compared to its average daily volume of 79,900 shares. The stock ranged in a price between $1.87-$1.95 after having opened the day at $1.87 as compared to the previous trading day's close of $1.87.

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 $43.7 million and is part of the technology sector. Shares are up 19.0% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate Local a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Local as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

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 30.76%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.90% is significantly below that of 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 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, with its decline in revenue, underperformed when compared the industry average of 19.9%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • LOCM's debt-to-equity ratio of 0.82 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 0.75 is weak.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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: 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.

Innodata ( INOD) was another company that pushed the Internet industry higher today. Innodata was up $0.07 (2.3%) to $3.17 on average volume. Throughout the day, 16,547 shares of Innodata exchanged hands as compared to its average daily volume of 19,400 shares. The stock ranged in a price between $3.07-$3.20 after having opened the day at $3.07 as compared to the previous trading day's close of $3.10.

Innodata Inc. provides business process, information technology, and professional services that are focused on digital enablement. The company operates in two segments, Content Services (CS) and Innodata Advanced Data Solutions (IADS). Innodata has a market cap of $78.1 million and is part of the technology sector. Shares are up 26.5% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Innodata a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Innodata as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year 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 INOD go as follows:

  • This stock has managed to rise its share value by 18.77% over the past twelve months. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has significantly increased by 104.44% to $0.07 million when compared to the same quarter last year. In addition, INNODATA INC has also vastly surpassed the industry average cash flow growth rate of -2.67%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.2%. Since the same quarter one year prior, revenues fell by 11.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 IT Services industry. The net income has significantly decreased by 452.5% when compared to the same quarter one year ago, falling from -$0.12 million to -$0.66 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 IT Services industry and the overall market, INNODATA INC's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Innodata 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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