3 Internet Stocks Pushing Industry Growth

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 128 points (0.8%) at 16,805 as of Friday, Oct. 24, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,914 issues advancing vs. 1,162 declining with 133 unchanged.

The Internet industry as a whole closed the day up 0.3% versus the S&P 500, which was up 0.7%. Top gainers within the Internet industry included Renren ( RENN), up 1.8%, Net Element ( NETE), up 2.7%, Phoenix New Media ( FENG), up 1.8%, Digital River ( DRIV), up 47.6% and VirnetX ( VHC), up 2.6%.

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

Phoenix New Media ( FENG) is one of the companies that pushed the Internet industry higher today. Phoenix New Media was up $0.17 (1.8%) to $9.51 on light volume. Throughout the day, 187,035 shares of Phoenix New Media exchanged hands as compared to its average daily volume of 402,800 shares. The stock ranged in a price between $9.30-$9.58 after having opened the day at $9.30 as compared to the previous trading day's close of $9.34.

Phoenix New Media Limited provides content on an integrated platform across Internet, mobile, and TV channels in the People's Republic of China. Phoenix New Media has a market cap of $696.5 million and is part of the technology sector. Shares are down 3.0% year-to-date as of the close of trading on Thursday. Currently there are 3 analysts who rate Phoenix New Media 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 Phoenix New Media 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, notable return on equity, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from TheStreet Ratings analysis on FENG go as follows:

  • FENG's revenue growth trails the industry average of 28.1%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FENG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.03, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Internet Software & Services industry and the overall market, PHOENIX NEW MEDIA LTD -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • PHOENIX NEW MEDIA LTD -ADR has improved earnings per share by 12.5% 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. We feel that this trend should continue. During the past fiscal year, PHOENIX NEW MEDIA LTD -ADR increased its bottom line by earning $0.59 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($4.49 versus $0.59).

You can view the full analysis from the report here: Phoenix New Media 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, Net Element ( NETE) was up $0.04 (2.7%) to $1.52 on light volume. Throughout the day, 474,930 shares of Net Element exchanged hands as compared to its average daily volume of 2,467,600 shares. The stock ranged in a price between $1.48-$1.64 after having opened the day at $1.49 as compared to the previous trading day's close of $1.48.

Net Element has a market cap of $58.7 million and is part of the technology sector. Shares are down 66.1% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Renren ( RENN) was another company that pushed the Internet industry higher today. Renren was up $0.06 (1.8%) to $3.41 on average volume. Throughout the day, 775,747 shares of Renren exchanged hands as compared to its average daily volume of 873,300 shares. The stock ranged in a price between $3.27-$3.43 after having opened the day at $3.35 as compared to the previous trading day's close of $3.35.

Renren Inc. operates a social networking Internet platform in the People's Republic of China. Renren has a market cap of $1.2 billion and is part of the technology sector. Shares are up 9.8% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Renren a buy, 4 analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Renren as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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 RENN go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 435.7% when compared to the same quarter one year prior, rising from -$9.33 million to $31.31 million.
  • RENN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • 36.29% is the gross profit margin for RENREN INC -ADR which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, RENN's net profit margin of 125.18% significantly outperformed against the industry.
  • This stock's share value has moved by only 13.74% over the past year. 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.
  • 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 Internet Software & Services industry and the overall market, RENREN INC -ADR'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: Renren 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.

More from Markets

Online Retailers Hit by Supreme Court Ruling Requiring Sales Tax Collection

Online Retailers Hit by Supreme Court Ruling Requiring Sales Tax Collection

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins

Stocks Tumble as Dow Heads for Eighth Straight Drop

Stocks Tumble as Dow Heads for Eighth Straight Drop

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

Video: Jim Cramer on Netflix, Disney, Intel, Micron and Goldman Sachs

Video: Jim Cramer on Netflix, Disney, Intel, Micron and Goldman Sachs