3 Stocks Pushing The Internet 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 Internet industry as a whole closed the day up 1.1% versus the S&P 500, which was down 0.2%. Top gainers within the Internet industry included Professional Diversity Network ( IPDN), up 4.4%, Selectica ( SLTC), up 3.3%, Innodata ( INOD), up 3.2%, Local ( LOCM), up 1.9% and BroadVision ( BVSN), up 2.2%.

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

Innodata ( INOD) is one of the companies that pushed the Internet industry higher today. Innodata was up $0.09 (3.2%) to $2.90 on light volume. Throughout the day, 7,124 shares of Innodata exchanged hands as compared to its average daily volume of 19,300 shares. The stock ranged in a price between $2.75-$3.08 after having opened the day at $3.08 as compared to the previous trading day's close of $2.81.

Innodata Inc. provides business process, information technology, and professional services that are focused on digital enablement. The company operates in two segments, Content Services (CS) and Innodata Advanced Data Solutions (IADS). Innodata has a market cap of $69.4 million and is part of the technology sector. Shares are up 14.7% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Innodata 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 Innodata as a hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from TheStreet Ratings analysis on INOD go as follows:

  • Compared to its price level of one year ago, INOD is up 10.00% to its most recent closing price of 2.75. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has significantly increased by 849.46% to $1.41 million when compared to the same quarter last year. In addition, INNODATA INC has also vastly surpassed the industry average cash flow growth rate of -2.44%.
  • INNODATA INC reported significant earnings per share improvement in the most recent quarter compared to 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, INNODATA INC swung to a loss, reporting -$0.43 versus $0.29 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.43).
  • 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 IT Services industry and the overall market, INNODATA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for INNODATA INC is currently lower than what is desirable, coming in at 33.03%. Regardless of INOD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.47% trails the industry average.

You can view the full analysis from the report here: Innodata 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, Selectica ( SLTC) was up $0.18 (3.3%) to $5.68 on light volume. Throughout the day, 6,122 shares of Selectica exchanged hands as compared to its average daily volume of 8,800 shares. The stock ranged in a price between $5.36-$6.09 after having opened the day at $5.51 as compared to the previous trading day's close of $5.50.

Selectica, Inc. provides cloud-based software solutions for companies in the United States, Canada, India, New Zealand, Switzerland, and the United Kingdom. Selectica has a market cap of $45.8 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 is 1 analyst who rates Selectica 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 Selectica as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, 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 SLTC 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 479.8% when compared to the same quarter one year ago, falling from -$0.47 million to -$2.70 million.
  • Net operating cash flow has significantly decreased to -$4.40 million or 58.19% 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 SELECTICA INC has not done very well: it is down 6.85% 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.
  • SELECTICA 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. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SELECTICA INC reported poor results of -$3.10 versus -$1.67 in the prior year. This year, the market expects an improvement in earnings (-$1.24 versus -$3.10).
  • 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 Internet Software & Services industry and the overall market, SELECTICA INC's return on equity significantly trails that of both the industry average and the S&P 500.

You can view the full analysis from the report here: Selectica 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 $0.21 (4.4%) to $4.95 on light volume. Throughout the day, 1,343 shares of Professional Diversity Network exchanged hands as compared to its average daily volume of 5,800 shares. The stock ranged in a price between $4.93-$4.96 after having opened the day at $4.93 as compared to the previous trading day's close of $4.74.

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. Professional Diversity Network has a market cap of $59.4 million and is part of the technology sector. Shares are up 2.2% 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 hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on IPDN go as follows:

  • IPDN's very impressive revenue growth greatly exceeded the industry average of 28.1%. Since the same quarter one year prior, revenues leaped by 60.9%. 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.
  • IPDN's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that IPDN's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for PROFESSIONAL DIVERSITY NETWK is currently very high, coming in at 75.37%. Regardless of IPDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IPDN's net profit margin of -59.74% significantly underperformed when compared to the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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 -$2.80 million or 679.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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.

More from Markets

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

To Win at Trade the U.S. Must Act and Behave Like China

To Win at Trade the U.S. Must Act and Behave Like China

Video: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Video: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

GE Confirms $11.1 Billion Transportation Merger With Wabtec

GE Confirms $11.1 Billion Transportation Merger With Wabtec