3 Stocks Advancing The Specialty Retail Industry

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 215 points (1.3%) at 16,615 as of Tuesday, Oct. 21, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,585 issues advancing vs. 535 declining with 105 unchanged.

The Specialty Retail industry as a whole closed the day up 1.7% versus the S&P 500, which was up 2.0%. Top gainers within the Specialty Retail industry included Birks Group ( BGI), up 29.9%, Books-A-Million ( BAMM), up 3.3%, DGSE Companies ( DGSE), up 7.3%, China Auto Logistics ( CALI), up 5.4% and Rush ( RUSHB), up 4.2%.

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

Rush ( RUSHB) is one of the companies that pushed the Specialty Retail industry higher today. Rush was up $1.22 (4.2%) to $30.50 on average volume. Throughout the day, 4,297 shares of Rush exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in a price between $29.65-$30.61 after having opened the day at $29.65 as compared to the previous trading day's close of $29.28.

Rush Enterprises, Inc., through its subsidiaries, operates as an integrated retailer of commercial vehicles and related services in the United States. The company owns and operates a network of commercial vehicle dealerships under the Rush Truck Centers name. Rush has a market cap of $289.7 million and is part of the services sector. Shares are up 14.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Rush a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Rush as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from TheStreet Ratings analysis on RUSHB go as follows:

  • The revenue growth greatly exceeded the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 49.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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.
  • RUSH ENTERPRISES INC reported significant earnings per share improvement 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, RUSH ENTERPRISES INC reported lower earnings of $1.22 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.22).
  • The gross profit margin for RUSH ENTERPRISES INC is rather low; currently it is at 16.35%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.67% trails that of the industry average.
  • Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.28, which clearly demonstrates the inability to cover short-term cash needs.

You can view the full analysis from the report here: Rush 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, China Auto Logistics ( CALI) was up $0.09 (5.4%) to $1.77 on light volume. Throughout the day, 25,569 shares of China Auto Logistics exchanged hands as compared to its average daily volume of 36,800 shares. The stock ranged in a price between $1.67-$1.88 after having opened the day at $1.68 as compared to the previous trading day's close of $1.68.

China Auto Logistics Inc. sells and trades in imported automobiles in the People's Republic of China. China Auto Logistics has a market cap of $7.1 million and is part of the services sector. Shares are down 50.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate China Auto Logistics 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 Auto Logistics as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and poor profit margins.

Highlights from TheStreet Ratings analysis on CALI go as follows:

  • The debt-to-equity ratio is very high at 3.51 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, CALI maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Specialty Retail industry and the overall market, CHINA AUTO LOGISTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINA AUTO LOGISTICS INC is currently extremely low, coming in at 0.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.62% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$13.35 million or 621.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CHINA AUTO LOGISTICS 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. During the past fiscal year, CHINA AUTO LOGISTICS INC reported lower earnings of $0.16 versus $0.67 in the prior year.

You can view the full analysis from the report here: China Auto Logistics 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.

Books-A-Million ( BAMM) was another company that pushed the Specialty Retail industry higher today. Books-A-Million was up $0.05 (3.3%) to $1.57 on average volume. Throughout the day, 16,974 shares of Books-A-Million exchanged hands as compared to its average daily volume of 14,200 shares. The stock ranged in a price between $1.54-$1.66 after having opened the day at $1.57 as compared to the previous trading day's close of $1.52.

Books-A-Million, Inc. operates as a book retailer primarily in the eastern United States. It operates in three segments: Retail Trade, Electronic Commerce Trade, and Real Estate Development and Management. Books-A-Million has a market cap of $22.7 million and is part of the services sector. Shares are down 33.3% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Books-A-Million a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Books-A-Million as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from TheStreet Ratings analysis on BAMM go as follows:

  • The gross profit margin for BOOKS-A-MILLION INC is currently lower than what is desirable, coming in at 28.63%. Regardless of BAMM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BAMM's net profit margin of -2.78% significantly underperformed when compared to the industry average.
  • BAMM'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 39.45%, 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.
  • BAMM's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.06 is very low and demonstrates very weak liquidity.
  • 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 Specialty Retail industry and the overall market, BOOKS-A-MILLION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • BOOKS-A-MILLION INC reported significant earnings per share improvement 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, BOOKS-A-MILLION INC swung to a loss, reporting -$0.52 versus $0.15 in the prior year.

You can view the full analysis from the report here: Books-A-Million 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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