3 Stocks Pushing The Telecommunications 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 17.89 points (-0.1%) at 17,537 as of Friday, Nov. 7, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,893 issues advancing vs. 1,131 declining with 143 unchanged.

The Telecommunications industry as a whole closed the day down 0.2% versus the S&P 500, which was down 0.1%. Top gainers within the Telecommunications industry included Internet Initiative Japan ( IIJI), up 4.3%, Optical Cable ( OCC), up 2.6%, Ikanos Communications ( IKAN), up 7.2%, Pointer Telocation ( PNTR), up 1.8% and RIT Technologies ( RITT), up 1.7%.

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

Pointer Telocation ( PNTR) is one of the companies that pushed the Telecommunications industry higher today. Pointer Telocation was up $0.14 (1.8%) to $7.90 on light volume. Throughout the day, 2,637 shares of Pointer Telocation exchanged hands as compared to its average daily volume of 29,100 shares. The stock ranged in a price between $7.85-$7.98 after having opened the day at $7.98 as compared to the previous trading day's close of $7.76.

Pointer Telocation Ltd. provides mobile resource management products and services for the automotive, insurance industries, and other mobile tracking markets worldwide. The company operates in two segments, Cellocator and Pointer. Pointer Telocation has a market cap of $59.6 million and is part of the technology sector. Shares are down 34.5% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Pointer Telocation a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Pointer Telocation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and attractive valuation levels. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from TheStreet Ratings analysis on PNTR go as follows:

  • PNTR's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 11.4%. 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.
  • Compared to its closing price of one year ago, PNTR's share price has jumped by 39.96%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • POINTER TELOCATION LTD's earnings per share declined by 17.6% 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, POINTER TELOCATION LTD increased its bottom line by earning $1.10 versus $0.36 in the prior year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Services & Supplies industry average, but is greater than that of the S&P 500. The net income increased by 17.2% when compared to the same quarter one year prior, going from $0.98 million to $1.15 million.

You can view the full analysis from the report here: Pointer Telocation Ratings Report

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At the close, Ikanos Communications ( IKAN) was up $0.02 (7.2%) to $0.34 on average volume. Throughout the day, 308,155 shares of Ikanos Communications exchanged hands as compared to its average daily volume of 375,200 shares. The stock ranged in a price between $0.32-$0.34 after having opened the day at $0.34 as compared to the previous trading day's close of $0.32.

Ikanos Communications, Inc. designs, develops, markets, and sells semiconductors and integrated firmware products for the digital home worldwide. It offers various digital subscriber line (DSL) processors for a range of power carrier infrastructure and customer premises equipment devices. Ikanos Communications has a market cap of $46.1 million and is part of the technology sector. Shares are down 72.4% year-to-date as of the close of trading on Thursday. Currently there are 2 analysts who rate Ikanos Communications a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Ikanos Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on IKAN 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 42.2% when compared to the same quarter one year ago, falling from -$8.67 million to -$12.33 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 Semiconductors & Semiconductor Equipment industry and the overall market, IKANOS COMMUNICATIONS INC'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 -$10.57 million or 61.95% when compared to the same quarter last year. Despite a decrease in cash flow of 61.95%, IKANOS COMMUNICATIONS INC is in line with the industry average cash flow growth rate of -64.32%.
  • IKAN'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 72.80%, which is also worse than the performance of the S&P 500 Index. 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.
  • IKANOS COMMUNICATIONS INC reported flat earnings per share in the most recent quarter. 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, IKANOS COMMUNICATIONS INC reported poor results of -$0.40 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.33 versus -$0.40).

You can view the full analysis from the report here: Ikanos Communications 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.

Internet Initiative Japan ( IIJI) was another company that pushed the Telecommunications industry higher today. Internet Initiative Japan was up $0.36 (4.3%) to $8.79 on light volume. Throughout the day, 1,257 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 3,700 shares. The stock ranged in a price between $8.69-$8.79 after having opened the day at $8.69 as compared to the previous trading day's close of $8.43.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $770.9 million and is part of the technology sector. Shares are down 37.2% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates Internet Initiative Japan a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates Internet Initiative Japan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • IIJI's revenue growth trails the industry average of 29.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.31, 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 1.20 is sturdy.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 49.6% when compared to the same quarter one year ago, falling from $9.61 million to $4.85 million.
  • The gross profit margin for INTERNET INITIATIVE JAPAN INC is currently lower than what is desirable, coming in at 26.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.78% significantly trails the industry average.

You can view the full analysis from the report here: Internet Initiative Japan 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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