3 Specialty Retail 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.

Two out of the three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading up 1 points (0.0%) at 17,689 as of Wednesday, Nov. 19, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,199 issues advancing vs. 1,792 declining with 180 unchanged.

The Specialty Retail industry as a whole closed the day up 0.4% versus the S&P 500, which was down 0.3%. Top gainers within the Specialty Retail industry included DGSE Companies ( DGSE), up 7.9%, Books-A-Million ( BAMM), up 12.7%, Mecox Lane ( MCOX), up 1.9%, China Auto Logistics ( CALI), up 6.1% and Trans World Entertainment ( TWMC), up 1.6%.

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

China Auto Logistics ( CALI) is one of the companies that pushed the Specialty Retail industry higher today. China Auto Logistics was up $0.07 (6.1%) to $1.22 on light volume. Throughout the day, 10,810 shares of China Auto Logistics exchanged hands as compared to its average daily volume of 33,400 shares. The stock ranged in a price between $1.09-$1.22 after having opened the day at $1.14 as compared to the previous trading day's close of $1.15.

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 $4.6 million and is part of the services sector. Shares are down 67.7% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate China Auto Logistics a buy, no analysts rate it a sell, and none rate it a hold.

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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% trails 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.

At the close, Mecox Lane ( MCOX) was up $0.06 (1.9%) to $3.21 on light volume. Throughout the day, 500 shares of Mecox Lane exchanged hands as compared to its average daily volume of 12,000 shares. The stock ranged in a price between $3.21-$3.21 after having opened the day at $3.21 as compared to the previous trading day's close of $3.15.

Mecox Lane Limited designs and sells health and beauty products through various retail channels in the People's Republic of China. It offers beauty and healthcare products, including skin care, fragrance, cosmetics, and other personal care products. Mecox Lane has a market cap of $40.3 million and is part of the services sector. Shares are down 15.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Mecox Lane 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 Mecox Lane as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on MCOX 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 & Catalog Retail industry. The net income has significantly decreased by 96.1% when compared to the same quarter one year ago, falling from -$6.19 million to -$12.13 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 & Catalog Retail industry and the overall market, MECOX LANE LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of MECOX LANE LTD has not done very well: it is down 24.08% 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. 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.
  • MECOX LANE LTD's earnings per share declined by 45.5% 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, MECOX LANE LTD continued to lose money by earning -$1.56 versus -$1.95 in the prior year.
  • MCOX 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. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.42 is very weak and demonstrates a lack of ability to pay short-term obligations.

You can view the full analysis from the report here: Mecox Lane 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 $0.20 (12.7%) to $1.77 on heavy volume. Throughout the day, 135,009 shares of Books-A-Million exchanged hands as compared to its average daily volume of 15,800 shares. The stock ranged in a price between $1.57-$1.97 after having opened the day at $1.60 as compared to the previous trading day's close of $1.57.

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 $23.2 million and is part of the services sector. Shares are down 32.0% year-to-date as of the close of trading on Tuesday. 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 38.80%, 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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