3 Stocks Boosting The Telecommunications 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 167 points (1.0%) at 17,113 as of Friday, Sept. 26, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,244 issues advancing vs. 828 declining with 137 unchanged.

The Telecommunications industry as a whole closed the day up 0.5% versus the S&P 500, which was up 0.9%. Top gainers within the Telecommunications industry included Internet Gold Golden Lines ( IGLD), up 2.8%, Frequency Electronics ( FEIM), up 2.6%, Gilat Satellite Networks ( GILT), up 4.7%, Telecom Italia SpA ( TI.A), up 1.7% and I D Systems ( IDSY), up 3.6%.

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

Gilat Satellite Networks ( GILT) is one of the companies that pushed the Telecommunications industry higher today. Gilat Satellite Networks was up $0.23 (4.7%) to $5.11 on heavy volume. Throughout the day, 37,033 shares of Gilat Satellite Networks exchanged hands as compared to its average daily volume of 17,400 shares. The stock ranged in a price between $4.89-$5.12 after having opened the day at $4.95 as compared to the previous trading day's close of $4.88.

Gilat Satellite Networks Ltd. and its subsidiaries provide Internet protocol (IP) based digital satellite communication and networking products and services worldwide. It designs, produces, and markets very small aperture terminals (VSATs) and related VSAT network equipment. Gilat Satellite Networks has a market cap of $207.4 million and is part of the technology sector. Shares are up 5.0% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Gilat Satellite Networks a buy, no analysts rate it a sell, and none rate it a hold.

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

Highlights from TheStreet Ratings analysis on GILT go as follows:

  • Net operating cash flow has significantly decreased to -$7.78 million or 1376.47% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • In its most recent trading session, GILT 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. 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.
  • 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, GILAT SATELLITE NETWORKS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • GILT, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues fell by 32.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • GILAT SATELLITE NETWORKS 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 year. During the past fiscal year, GILAT SATELLITE NETWORKS LTD continued to lose money by earning -$0.23 versus -$0.55 in the prior year.

You can view the full analysis from the report here: Gilat Satellite Networks Ratings Report

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At the close, Frequency Electronics ( FEIM) was up $0.28 (2.6%) to $10.84 on average volume. Throughout the day, 8,390 shares of Frequency Electronics exchanged hands as compared to its average daily volume of 5,700 shares. The stock ranged in a price between $10.62-$10.97 after having opened the day at $10.62 as compared to the previous trading day's close of $10.56.

Frequency Electronics, Inc., together with its subsidiaries, designs, develops, and manufactures precision time and frequency control products and components for microwave integrated circuit applications. It operates in three segments: FEI-NY, Gillam-FEI, and FEI-Zyfer. Frequency Electronics has a market cap of $94.8 million and is part of the technology sector. Shares are down 5.4% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Frequency Electronics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Frequency Electronics 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, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from TheStreet Ratings analysis on FEIM go as follows:

  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 17.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • FEIM's debt-to-equity ratio is very low at 0.14 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 4.07, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry average. The net income increased by 6.4% when compared to the same quarter one year prior, going from $0.68 million to $0.72 million.
  • FREQUENCY ELECTRONICS INC reported flat earnings per share in the most recent quarter. 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, FREQUENCY ELECTRONICS INC increased its bottom line by earning $0.47 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.47).
  • 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, FREQUENCY ELECTRONICS INC's return on equity is below that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Frequency Electronics 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.

Internet Gold Golden Lines ( IGLD) was another company that pushed the Telecommunications industry higher today. Internet Gold Golden Lines was up $0.26 (2.8%) to $9.44 on light volume. Throughout the day, 2,899 shares of Internet Gold Golden Lines exchanged hands as compared to its average daily volume of 4,100 shares. The stock ranged in a price between $9.10-$9.44 after having opened the day at $9.10 as compared to the previous trading day's close of $9.18.

Internet Gold Golden Lines has a market cap of $180.5 million and is part of the technology sector. Shares are up 7.2% 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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