3 Stocks Advancing The Computer Hardware Industry

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 101 points (0.6%) at 17,132 as of Tuesday, Sept. 16, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,961 issues advancing vs. 1,099 declining with 138 unchanged.

The Computer Hardware industry as a whole closed the day down 0.2% versus the S&P 500, which was up 0.7%. Top gainers within the Computer Hardware industry included Video Display ( VIDE), up 2.2%, Interphase ( INPH), up 3.6%, Dot Hill Systems ( HILL), up 1.6%, Nimble Storage ( NMBL), up 2.1% and SanDisk ( SNDK), up 2.8%.

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

Nimble Storage ( NMBL) is one of the companies that pushed the Computer Hardware industry higher today. Nimble Storage was up $0.55 (2.1%) to $27.02 on average volume. Throughout the day, 983,209 shares of Nimble Storage exchanged hands as compared to its average daily volume of 904,200 shares. The stock ranged in a price between $25.82-$27.14 after having opened the day at $26.40 as compared to the previous trading day's close of $26.47.

Nimble Storage has a market cap of $2.1 billion and is part of the technology sector. Shares are down 41.6% year-to-date as of the close of trading on Monday.

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, Dot Hill Systems ( HILL) was up $0.06 (1.6%) to $3.84 on light volume. Throughout the day, 177,096 shares of Dot Hill Systems exchanged hands as compared to its average daily volume of 462,300 shares. The stock ranged in a price between $3.72-$3.89 after having opened the day at $3.75 as compared to the previous trading day's close of $3.78.

Dot Hill Systems Corp. designs, manufactures, and markets a range of software and hardware storage systems for the entry and mid-range storage markets worldwide. Dot Hill Systems has a market cap of $233.7 million and is part of the technology sector. Shares are up 12.2% year-to-date as of the close of trading on Monday. Currently there are 3 analysts who rate Dot Hill Systems 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 Dot Hill Systems as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on HILL go as follows:

  • HILL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, HILL has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 35.16% is the gross profit margin for DOT HILL SYSTEMS CORP 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 -0.16% is in-line with the industry average.
  • Compared to its closing price of one year ago, HILL's share price has jumped by 51.93%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • DOT HILL SYSTEMS CORP 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. 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, DOT HILL SYSTEMS CORP turned its bottom line around by earning $0.10 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus $0.10).
  • HILL, with its decline in revenue, underperformed when compared the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

You can view the full analysis from the report here: Dot Hill Systems 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.

Interphase ( INPH) was another company that pushed the Computer Hardware industry higher today. Interphase was up $0.11 (3.6%) to $3.20 on light volume. Throughout the day, 5,867 shares of Interphase exchanged hands as compared to its average daily volume of 36,500 shares. The stock ranged in a price between $3.07-$3.20 after having opened the day at $3.15 as compared to the previous trading day's close of $3.09.

Interphase Corporation, an information and communications technology company, provides connectivity, interworking, and packet processing solutions in the Pacific Rim, North America, and Europe. Interphase has a market cap of $22.4 million and is part of the technology sector. Shares are down 17.6% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Interphase a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Interphase as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on INPH 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 26.0% when compared to the same quarter one year ago, falling from -$0.90 million to -$1.13 million.
  • The gross profit margin for INTERPHASE CORP is currently lower than what is desirable, coming in at 30.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -34.58% is significantly below that of the industry average.
  • Looking at the price performance of INPH's shares over the past 12 months, there is not much good news to report: the stock is down 35.63%, 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, INTERPHASE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • INTERPHASE CORP's earnings per share declined by 23.1% 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, INTERPHASE CORP continued to lose money by earning -$0.39 versus -$0.54 in the prior year.

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