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 down 78.22 points (-0.4%) at 17,774 as of Tuesday, Dec. 9, 2014, 3:25 PM ET. The NYSE advances/declines ratio sits at 1,227 issues advancing vs. 1,763 declining with 144 unchanged.

The Electronics industry as a whole closed the day up 1.4% versus the S&P 500, which was down 0.2%. Top gainers within the Electronics industry included Aetrium ( ATRM), up 1.6%, Advanced Photonix ( API), up 12.0%, Qualstar ( QBAK), up 2.4%, Forward Industries ( FORD), up 4.5% and SMTC ( SMTX), up 4.7%.

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

Qualstar ( QBAK) is one of the companies that pushed the Electronics industry higher today. Qualstar was up $0.03 (2.4%) to $1.29 on light volume. Throughout the day, 5,993 shares of Qualstar exchanged hands as compared to its average daily volume of 24,200 shares. The stock ranged in a price between $1.25-$1.33 after having opened the day at $1.30 as compared to the previous trading day's close of $1.26.

Qualstar Corporation designs, develops, manufactures, and sells power supplies and data storage systems worldwide. It operates through two segments, Power Supplies and Tape Libraries. Qualstar has a market cap of $16.2 million and is part of the technology sector. Shares are up 11.5% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Qualstar a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Qualstar as a sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity.

Highlights from TheStreet Ratings analysis on QBAK go as follows:

  • 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 Computers & Peripherals industry and the overall market, QUALSTAR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • 38.28% is the gross profit margin for QUALSTAR CORP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -9.69% is in-line with the industry average.
  • QUALSTAR CORP reported significant earnings per share improvement 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, QUALSTAR CORP continued to lose money by earning -$0.47 versus -$0.85 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 87.3% when compared to the same quarter one year prior, rising from -$2.53 million to -$0.32 million.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

You can view the full analysis from the report here: Qualstar 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, Advanced Photonix ( API) was up $0.04 (12.0%) to $0.35 on average volume. Throughout the day, 79,598 shares of Advanced Photonix exchanged hands as compared to its average daily volume of 80,100 shares. The stock ranged in a price between $0.33-$0.35 after having opened the day at $0.35 as compared to the previous trading day's close of $0.31.

Advanced Photonix, Inc. develops, manufactures, and sells optoelectronic devices, and value-added sub-systems and systems to various original equipment manufacturers primarily in North America, Asia, Europe, and Australia. Advanced Photonix has a market cap of $13.5 million and is part of the technology sector. Shares are down 47.8% year-to-date as of the close of trading on Monday. Currently there is 1 analyst who rates Advanced Photonix 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 Advanced Photonix as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on API go as follows:

  • API'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 53.75%, 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.
  • 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 Electronic Equipment, Instruments & Components industry and the overall market, ADVANCED PHOTONIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 35.77% is the gross profit margin for ADVANCED PHOTONIX INC which we consider to be strong. Regardless of API's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, API's net profit margin of -4.72% significantly underperformed when compared to the industry average.
  • ADVANCED PHOTONIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, ADVANCED PHOTONIX INC reported poor results of -$0.14 versus -$0.13 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.14).
  • API's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very 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.

You can view the full analysis from the report here: Advanced Photonix 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.

Aetrium ( ATRM) was another company that pushed the Electronics industry higher today. Aetrium was up $0.05 (1.6%) to $3.18 on light volume. Throughout the day, 402 shares of Aetrium exchanged hands as compared to its average daily volume of 3,600 shares. The stock ranged in a price between $3.12-$3.18 after having opened the day at $3.12 as compared to the previous trading day's close of $3.13.

Aetrium has a market cap of $4.0 million and is part of the technology sector. Shares are down 49.1% year-to-date as of the close of trading on Monday.

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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