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.

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 15.81 points (-0.1%) at 17,598 as of Tuesday, Nov. 11, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,371 issues advancing vs. 1,634 declining with 179 unchanged.

The Internet industry as a whole closed the day up 0.3% versus the S&P 500, which was unchanged. Top gainers within the Internet industry included Professional Diversity Network ( IPDN), up 1.6%, Taomee Holdings ( TAOM), up 1.7%, Synacor ( SYNC), up 7.4%, Spark Networks ( LOV), up 4.0% and Tremor Video ( TRMR), up 14.9%.

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

Synacor ( SYNC) is one of the companies that pushed the Internet industry higher today. Synacor was up $0.13 (7.4%) to $1.89 on light volume. Throughout the day, 36,972 shares of Synacor exchanged hands as compared to its average daily volume of 82,300 shares. The stock ranged in a price between $1.75-$1.89 after having opened the day at $1.75 as compared to the previous trading day's close of $1.76.

Synacor, Inc. provides startpages and homescreens, TV Everywhere solutions, Identity Management services, and various cloud-based services across a range of devices for cable, satellite, telecom, and consumer electronics companies in the United States, and the United Kingdom. Synacor has a market cap of $48.9 million and is part of the technology sector. Shares are down 27.8% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Synacor a buy, 1 analyst rates 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 Synacor 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, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on SYNC go as follows:

  • SYNACOR 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SYNACOR INC swung to a loss, reporting -$0.04 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 487.5% in earnings (-$0.24 versus -$0.04).
  • 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 212.0% when compared to the same quarter one year ago, falling from -$0.83 million to -$2.60 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 Internet Software & Services industry and the overall market, SYNACOR 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 -$0.52 million or 154.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.85%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% compared to the year-earlier 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.

You can view the full analysis from the report here: Synacor 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, Taomee Holdings ( TAOM) was up $0.07 (1.7%) to $4.14 on light volume. Throughout the day, 1,638 shares of Taomee Holdings exchanged hands as compared to its average daily volume of 13,900 shares. The stock ranged in a price between $4.06-$4.17 after having opened the day at $4.06 as compared to the previous trading day's close of $4.07.

Taomee Holdings Limited operates as a children's entertainment and media company in the People's Republic of China. It operates through two segments, Online Business and Offline Business. Taomee Holdings has a market cap of $141.6 million and is part of the technology sector. Shares are down 19.4% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Taomee Holdings 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 Taomee Holdings as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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 TAOM go as follows:

  • TAOM 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 3.53, which clearly demonstrates the ability to cover short-term cash needs.
  • The revenue fell significantly faster than the industry average of 28.4%. Since the same quarter one year prior, revenues fell by 14.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • TAOMEE HOLDINGS LTD -ADR 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TAOMEE HOLDINGS LTD -ADR reported lower earnings of $0.15 versus $0.23 in the prior year. For the next year, the market is expecting a contraction of 146.7% in earnings (-$0.07 versus $0.15).
  • 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 Software industry. The net income has significantly decreased by 338.4% when compared to the same quarter one year ago, falling from $0.34 million to -$0.82 million.

You can view the full analysis from the report here: Taomee Holdings 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.

Professional Diversity Network ( IPDN) was another company that pushed the Internet industry higher today. Professional Diversity Network was up $0.07 (1.6%) to $4.57 on heavy volume. Throughout the day, 15,687 shares of Professional Diversity Network exchanged hands as compared to its average daily volume of 4,600 shares. The stock ranged in a price between $4.50-$4.63 after having opened the day at $4.50 as compared to the previous trading day's close of $4.50.

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. Professional Diversity Network has a market cap of $55.9 million and is part of the technology sector. Shares are down 3.9% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Professional Diversity Network a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Professional Diversity Network 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from TheStreet Ratings analysis on IPDN 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 Internet Software & Services industry. The net income has significantly decreased by 266.9% when compared to the same quarter one year ago, falling from -$0.13 million to -$0.49 million.
  • 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 Internet Software & Services industry and the overall market, PROFESSIONAL DIVERSITY NETWK'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 -$0.77 million or 2161.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of PROFESSIONAL DIVERSITY NETWK has not done very well: it is down 14.29% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • PROFESSIONAL DIVERSITY NETWK 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PROFESSIONAL DIVERSITY NETWK swung to a loss, reporting -$0.23 versus $0.27 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.23).

You can view the full analysis from the report here: Professional Diversity Network 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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