3 Telecommunications Stocks Nudging 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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 154 points (0.9%) at 17,210 as of Wednesday, Sept. 24, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,794 issues advancing vs. 1,244 declining with 169 unchanged.

The Telecommunications industry as a whole closed the day up 0.3% versus the S&P 500, which was up 0.8%. Top gainers within the Telecommunications industry included Optical Cable ( OCC), up 1.6%, Ikanos Communications ( IKAN), up 1.7%, B Communications ( BCOM), up 3.3%, China TechFaith Wireless Comm Tech ( CNTF), up 1.6% and Telecom Italia SpA ( TI.A), up 1.7%.

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

China TechFaith Wireless Comm Tech ( CNTF) is one of the companies that pushed the Telecommunications industry higher today. China TechFaith Wireless Comm Tech was up $0.02 (1.6%) to $1.29 on average volume. Throughout the day, 58,522 shares of China TechFaith Wireless Comm Tech exchanged hands as compared to its average daily volume of 75,600 shares. The stock ranged in a price between $1.26-$1.30 after having opened the day at $1.27 as compared to the previous trading day's close of $1.27.

China Techfaith Wireless Communication Technology Limited is engaged in the original design, development, and sale of mobile handsets in the People's Republic of China and internationally. China TechFaith Wireless Comm Tech has a market cap of $67.0 million and is part of the technology sector. Shares are down 24.2% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate China TechFaith Wireless Comm Tech 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 China TechFaith Wireless Comm Tech as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on CNTF 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 Computers & Peripherals industry. The net income has significantly decreased by 114.9% when compared to the same quarter one year ago, falling from -$0.97 million to -$2.09 million.
  • 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 Computers & Peripherals industry and the overall market, CHINA TECHFAITH WIRELESS-ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINA TECHFAITH WIRELESS-ADR is currently extremely low, coming in at 11.43%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.76% is significantly below that of the industry average.
  • The revenue fell significantly faster than the industry average of 9.3%. Since the same quarter one year prior, revenues fell by 22.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • CHINA TECHFAITH WIRELESS-ADR 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. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, CHINA TECHFAITH WIRELESS-ADR continued to lose money by earning -$0.05 versus -$0.06 in the prior year.

You can view the full analysis from the report here: China TechFaith Wireless Comm Tech 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, B Communications ( BCOM) was up $0.64 (3.3%) to $20.05 on heavy volume. Throughout the day, 26,661 shares of B Communications exchanged hands as compared to its average daily volume of 3,800 shares. The stock ranged in a price between $19.17-$20.05 after having opened the day at $19.40 as compared to the previous trading day's close of $19.41.

B Communications Ltd. provides various communications services in Israel. B Communications has a market cap of $602.0 million and is part of the technology sector. Shares are up 15.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate B Communications 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 B Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from TheStreet Ratings analysis on BCOM go as follows:

  • BCOM's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • B COMMUNICATIONS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, B COMMUNICATIONS LTD increased its bottom line by earning $1.29 versus $0.41 in the prior year.
  • 43.72% is the gross profit margin for B COMMUNICATIONS LTD which we consider to be strong. Regardless of BCOM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCOM's net profit margin of 39.34% significantly outperformed against the industry.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The debt-to-equity ratio is very high at 14.29 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BCOM maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.

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

Ikanos Communications ( IKAN) was another company that pushed the Telecommunications industry higher today. Ikanos Communications was up $0.01 (1.7%) to $0.36 on average volume. Throughout the day, 134,389 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 175,500 shares. The stock ranged in a price between $0.34-$0.37 after having opened the day at $0.36 as compared to the previous trading day's close of $0.35.

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 $36.7 million and is part of the technology sector. Shares are down 69.2% year-to-date as of the close of trading on Tuesday. Currently there are 2 analysts who rate Ikanos Communications a buy, no analysts rate it a sell, and none rate it a hold.

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, weak operating cash flow 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.
  • Net operating cash flow has significantly decreased to -$10.57 million or 61.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 70.74%, 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).

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.

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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