3 Electronics Stocks Driving 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.

Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 27 points (0.2%) at 17,393 as of Tuesday, Nov. 4, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,085 issues advancing vs. 1,951 declining with 143 unchanged.

The Electronics industry as a whole closed the day down 0.3% versus the S&P 500, which was down 0.3%. Top gainers within the Electronics industry included Bel Fuse ( BELFA), up 3.1%, Aehr Test Systems ( AEHR), up 3.5%, SemiLEDs ( LEDS), up 4.2%, IEC Electronics ( IEC), up 1.6% and Schmitt Industries ( SMIT), up 2.4%.

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

SemiLEDs ( LEDS) is one of the companies that pushed the Electronics industry higher today. SemiLEDs was up $0.02 (4.2%) to $0.49 on light volume. Throughout the day, 40,713 shares of SemiLEDs exchanged hands as compared to its average daily volume of 118,100 shares. The stock ranged in a price between $0.47-$0.50 after having opened the day at $0.49 as compared to the previous trading day's close of $0.47.

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips and LED components. SemiLEDs has a market cap of $13.6 million and is part of the technology sector. Shares are down 48.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate SemiLEDs 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 SemiLEDs as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LEDS go as follows:

  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, SEMILEDS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$4.14 million or 78.66% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • LEDS'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 59.65%, 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.
  • SEMILEDS CORP has improved earnings per share by 42.5% 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 year. During the past fiscal year, SEMILEDS CORP continued to lose money by earning -$1.58 versus -$1.80 in the prior year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 41.5% when compared to the same quarter one year prior, rising from -$10.95 million to -$6.41 million.

You can view the full analysis from the report here: SemiLEDs 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, Aehr Test Systems ( AEHR) was up $0.09 (3.5%) to $2.66 on heavy volume. Throughout the day, 33,938 shares of Aehr Test Systems exchanged hands as compared to its average daily volume of 16,700 shares. The stock ranged in a price between $2.58-$2.80 after having opened the day at $2.59 as compared to the previous trading day's close of $2.57.

Aehr Test Systems designs, engineers, develops, manufactures, and sells test and burn-in equipment used in the semiconductor industry worldwide. Aehr Test Systems has a market cap of $30.5 million and is part of the technology sector. Shares are down 14.2% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Aehr Test Systems 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 Aehr Test Systems 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 AEHR 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 446.4% when compared to the same quarter one year ago, falling from -$0.17 million to -$0.91 million.
  • Net operating cash flow has significantly decreased to -$0.22 million or 226.74% 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, AEHR 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AEHR TEST SYSTEMS's return on equity significantly trails that of both the industry average and the S&P 500.
  • 46.07% is the gross profit margin for AEHR TEST SYSTEMS which we consider to be strong. Regardless of AEHR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AEHR's net profit margin of -25.49% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Aehr Test Systems 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.

Bel Fuse ( BELFA) was another company that pushed the Electronics industry higher today. Bel Fuse was up $0.80 (3.1%) to $26.70 on light volume. Throughout the day, 100 shares of Bel Fuse exchanged hands as compared to its average daily volume of 1,000 shares. The stock ranged in a price between $26.70-$26.70 after having opened the day at $26.70 as compared to the previous trading day's close of $25.90.

Bel Fuse Inc. designs, manufactures, and sells products used in the networking, telecommunication, high-speed data transmission, commercial aerospace, military, broadcasting, transportation, and consumer electronic industries worldwide. Bel Fuse has a market cap of $54.5 million and is part of the technology sector. Shares are up 29.0% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Bel Fuse a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Bel Fuse as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from TheStreet Ratings analysis on BELFA go as follows:

  • BELFA's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 54.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • BEL FUSE 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. 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, BEL FUSE INC increased its bottom line by earning $1.39 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $1.39).
  • 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 Communications Equipment industry and the overall market, BEL FUSE 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: Bel Fuse 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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