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 are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 272.52 points (-1.6%) at 16,719 as of Tuesday, Oct. 7, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 674 issues advancing vs. 2,403 declining with 140 unchanged.

The Telecommunications industry as a whole closed the day down 1.3% versus the S&P 500, which was down 1.5%. Top gainers within the Telecommunications industry included Sajan ( SAJA), up 3.2%, Optical Cable ( OCC), up 5.3%, Hong Kong Television Network ( HKTV), up 4.1%, Envivio ( ENVI), up 3.7% and Aviat Networks ( AVNW), up 2.3%.

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

Aviat Networks ( AVNW) is one of the companies that pushed the Telecommunications industry higher today. Aviat Networks was up $0.04 (2.3%) to $1.80 on average volume. Throughout the day, 472,765 shares of Aviat Networks exchanged hands as compared to its average daily volume of 378,800 shares. The stock ranged in a price between $1.75-$1.82 after having opened the day at $1.78 as compared to the previous trading day's close of $1.76.

Aviat Networks, Inc. designs, manufactures, and sells a range of wireless networking products, solutions, and services in North America and Internationally. Aviat Networks has a market cap of $110.6 million and is part of the technology sector. Shares are down 21.2% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Aviat Networks a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Aviat Networks as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on AVNW 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 108.6% when compared to the same quarter one year ago, falling from -$5.80 million to -$12.10 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 Communications Equipment industry and the overall market, AVIAT NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AVIAT NETWORKS INC is currently lower than what is desirable, coming in at 25.73%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -14.08% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.97%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 233.33% compared to 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.
  • AVIAT NETWORKS INC 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. 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, AVIAT NETWORKS INC reported poor results of -$0.83 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings (-$0.20 versus -$0.83).

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

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At the close, Envivio ( ENVI) was up $0.06 (3.7%) to $1.70 on average volume. Throughout the day, 71,254 shares of Envivio exchanged hands as compared to its average daily volume of 74,200 shares. The stock ranged in a price between $1.62-$1.72 after having opened the day at $1.68 as compared to the previous trading day's close of $1.64.

Envivio, Inc. provides software-based IP video processing and distribution solutions that enable the delivery of high-quality video to consumers. Envivio has a market cap of $46.3 million and is part of the technology sector. Shares are down 50.9% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Envivio a buy, no analysts rate it a sell, and 1 rates 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 Envivio as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on ENVI 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 Software industry. The net income has significantly decreased by 64.8% when compared to the same quarter one year ago, falling from -$2.48 million to -$4.09 million.
  • Net operating cash flow has significantly decreased to -$1.05 million or 129.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 66.66% compared to 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.
  • 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 Software industry and the overall market, ENVIVIO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ENVIVIO INC is rather high; currently it is at 64.37%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ENVI's net profit margin of -35.67% significantly underperformed when compared to the industry average.

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

Sajan ( SAJA) was another company that pushed the Telecommunications industry higher today. Sajan was up $0.16 (3.2%) to $5.18 on heavy volume. Throughout the day, 6,047 shares of Sajan exchanged hands as compared to its average daily volume of 2,600 shares. The stock ranged in a price between $5.16-$5.18 after having opened the day at $5.16 as compared to the previous trading day's close of $5.02.

Sajan has a market cap of $21.3 million and is part of the technology sector. Shares are down 9.8% year-to-date as of the close of trading on Monday.

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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