3 Stocks Pushing The Technology Sector Lower

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.

The Technology sector as a whole closed the day down 1.5% versus the S&P 500, which was down 0.8%. Laggards within the Technology sector included Qualstar ( QBAK), down 1.6%, Sajan ( SAJA), down 4.5%, Bio-Rad Laboratories ( BIO.B), down 3.5%, One Horizon Group ( OHGI), down 3.6% and Electro-Sensors ( ELSE), down 3.2%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

China Unicom (Hong Kong ( CHU) is one of the companies that pushed the Technology sector lower today. China Unicom (Hong Kong was down $0.40 (2.5%) to $15.69 on average volume. Throughout the day, 505,735 shares of China Unicom (Hong Kong exchanged hands as compared to its average daily volume of 402,200 shares. The stock ranged in price between $15.63-$15.84 after having opened the day at $15.84 as compared to the previous trading day's close of $16.09.

China Unicom (Hong Kong) Limited, an investment holding company, provides cellular and fixed-line voice, broadband and other Internet-related, information communications technology, and business and data communications services in China. China Unicom (Hong Kong has a market cap of $39.6 billion and is part of the telecommunications industry. Shares are up 6.8% year-to-date as of the close of trading on Friday. Currently there are 2 analysts who rate China Unicom (Hong Kong a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates China Unicom (Hong Kong as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, relatively poor performance when compared with the S&P 500 during the past year and weak operating cash flow.

Highlights from TheStreet Ratings analysis on CHU go as follows:

  • CHINA UNICOM (HONG KONG) LTD's earnings per share declined by 12.5% 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, CHINA UNICOM (HONG KONG) LTD increased its bottom line by earning $0.71 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus $0.71).
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.15 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • CHU, with its decline in revenue, slightly underperformed the industry average of 1.7%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • In its most recent trading session, CHU 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Telecommunication Services industry average. The net income has decreased by 2.4% when compared to the same quarter one year ago, dropping from $560.57 million to $547.07 million.

You can view the full analysis from the report here: China Unicom (Hong Kong Ratings Report

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At the close, Sajan ( SAJA) was down $0.24 (4.5%) to $5.11 on heavy volume. Throughout the day, 8,719 shares of Sajan exchanged hands as compared to its average daily volume of 2,200 shares. The stock ranged in price between $5.11-$5.35 after having opened the day at $5.25 as compared to the previous trading day's close of $5.35.

Sajan has a market cap of $22.0 million and is part of the telecommunications industry. Shares are down 7.8% year-to-date as of the close of trading on Friday. Currently there is 1 analyst who rates Sajan a buy, no analysts rate it a sell, and none rate it a hold.

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Qualstar ( QBAK) was another company that pushed the Technology sector lower today. Qualstar was down $0.02 (1.6%) to $1.25 on average volume. Throughout the day, 11,635 shares of Qualstar exchanged hands as compared to its average daily volume of 9,200 shares. The stock ranged in price between $1.22-$1.38 after having opened the day at $1.29 as compared to the previous trading day's close of $1.27.

Qualstar Corporation designs, develops, manufactures, and sells power supplies and data storage systems worldwide. The company operates in two segments, Power Supplies and Tape Libraries. Qualstar has a market cap of $14.7 million and is part of the telecommunications industry. Shares are up 12.4% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Qualstar as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on QBAK go as follows:

  • 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 Computers & Peripherals industry and the overall market, QUALSTAR CORP'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 -$2.61 million or 191.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • QBAK has underperformed the S&P 500 Index, declining 16.67% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • QUALSTAR CORP has improved earnings per share by 33.3% 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, QUALSTAR CORP reported poor results of -$0.85 versus -$0.35 in the prior year.
  • The revenue fell significantly faster than the industry average of 9.3%. Since the same quarter one year prior, revenues fell by 24.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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

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