3 Stocks Moving The Computer Hardware Industry Upward

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.

One out of the three major indices traded up today The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 24.50 points (-0.2%) at 16,117 as of Thursday, Oct. 16, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,202 issues advancing vs. 904 declining with 116 unchanged.

The Computer Hardware industry as a whole closed the day up 1.2% versus the S&P 500, which was unchanged. Top gainers within the Computer Hardware industry included Video Display ( VIDE), up 2.4%, Lantronix ( LTRX), up 4.3%, Elecsys ( ESYS), up 6.1%, Overland Storage ( OVRL), up 2.6% and SMART Technologies ( SMT), up 4.1%.

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

SMART Technologies ( SMT) is one of the companies that pushed the Computer Hardware industry higher today. SMART Technologies was up $0.06 (4.1%) to $1.53 on light volume. Throughout the day, 26,963 shares of SMART Technologies exchanged hands as compared to its average daily volume of 123,100 shares. The stock ranged in a price between $1.43-$1.53 after having opened the day at $1.43 as compared to the previous trading day's close of $1.47.

SMART Technologies has a market cap of $186.6 million and is part of the technology sector. Shares are down 30.1% year-to-date as of the close of trading on Wednesday.

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At the close, Overland Storage ( OVRL) was up $0.06 (2.6%) to $2.38 on average volume. Throughout the day, 46,139 shares of Overland Storage exchanged hands as compared to its average daily volume of 53,400 shares. The stock ranged in a price between $2.23-$2.60 after having opened the day at $2.28 as compared to the previous trading day's close of $2.32.

Overland Storage, Inc. provides unified data management and data protection solutions worldwide. Overland Storage has a market cap of $43.1 million and is part of the technology sector. Shares are down 52.2% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Overland Storage a buy, no analysts rate it a sell, and 1 rates it a hold.

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

Highlights from TheStreet Ratings analysis on OVRL 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 36.1% when compared to the same quarter one year ago, falling from -$5.43 million to -$7.39 million.
  • The gross profit margin for OVERLAND STORAGE INC is currently lower than what is desirable, coming in at 31.21%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -30.50% is significantly below that of the industry average.
  • OVRL'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 36.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.81 is weak.
  • Compared to other companies in the Computers & Peripherals industry and the overall market, OVERLAND STORAGE INC's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Overland Storage 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.

Lantronix ( LTRX) was another company that pushed the Computer Hardware industry higher today. Lantronix was up $0.08 (4.3%) to $1.84 on light volume. Throughout the day, 17,463 shares of Lantronix exchanged hands as compared to its average daily volume of 46,800 shares. The stock ranged in a price between $1.76-$1.84 after having opened the day at $1.76 as compared to the previous trading day's close of $1.76.

Lantronix, Inc. designs, develops, markets, and sells networking and communications products in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Lantronix has a market cap of $26.8 million and is part of the technology sector. Shares are up 12.5% year-to-date as of the close of trading on Wednesday. Currently there are 2 analysts who rate Lantronix a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Lantronix as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on LTRX go as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • LANTRONIX INC 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LANTRONIX INC continued to lose money by earning -$0.06 versus -$0.19 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$0.06).
  • LTRX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.1%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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, LANTRONIX INC's return on equity significantly trails that of both the industry average and the S&P 500.

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