3 Stocks Moving The Internet Industry Upward

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 106.38 points (-0.6%) at 17,321 as of Thursday, Jan. 15, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,098 issues advancing vs. 2,009 declining with 122 unchanged.

The Internet industry as a whole closed the day down 2.0% versus the S&P 500, which was down 0.9%. Top gainers within the Internet industry included LookSmart ( LOOK), up 1.9%, Selectica ( SLTC), up 2.8%, Internet Initiative Japan ( IIJI), up 1.5%, Local ( LOCM), up 8.0% and eLong ( LONG), up 2.0%.

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

Internet Initiative Japan ( IIJI) is one of the companies that pushed the Internet industry higher today. Internet Initiative Japan was up $0.15 (1.5%) to $10.00 on average volume. Throughout the day, 4,466 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 3,800 shares. The stock ranged in a price between $9.93-$10.03 after having opened the day at $9.98 as compared to the previous trading day's close of $9.85.

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 $912.4 million and is part of the technology sector. Shares are down 1.5% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Internet Initiative Japan 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 Internet Initiative Japan 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 reasonable valuation levels. 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 IIJI go as follows:

  • Although IIJI's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • The revenue fell significantly faster than the industry average of 29.0%. Since the same quarter one year prior, revenues fell by 13.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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 35.1% when compared to the same quarter one year ago, falling from $12.82 million to $8.32 million.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, INTERNET INITIATIVE JAPAN INC's return on equity is below that of both the industry average and the S&P 500.

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.

At the close, Selectica ( SLTC) was up $0.15 (2.8%) to $5.50 on average volume. Throughout the day, 5,703 shares of Selectica exchanged hands as compared to its average daily volume of 6,100 shares. The stock ranged in a price between $5.44-$5.50 after having opened the day at $5.44 as compared to the previous trading day's close of $5.35.

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 $43.8 million and is part of the technology sector. Shares are up 3.3% year-to-date as of the close of trading on Wednesday. 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 19.09% 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.

LookSmart ( LOOK) was another company that pushed the Internet industry higher today. LookSmart was up $0.02 (1.9%) to $0.90 on heavy volume. Throughout the day, 32,104 shares of LookSmart exchanged hands as compared to its average daily volume of 14,100 shares. The stock ranged in a price between $0.76-$0.93 after having opened the day at $0.84 as compared to the previous trading day's close of $0.88.

LookSmart, Ltd. provides search and display advertising network solutions in the United States, Europe, the Middle East, and Africa. LookSmart has a market cap of $5.1 million and is part of the technology sector. Shares are up 23.5% year-to-date as of the close of trading on Wednesday. Currently there are no analysts who rate LookSmart a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates LookSmart as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on LOOK 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 36.8% when compared to the same quarter one year ago, falling from -$0.95 million to -$1.30 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, LOOKSMART LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 27.77% 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.
  • LOOKSMART LTD's earnings per share declined by 27.8% 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, LOOKSMART LTD continued to lose money by earning -$0.93 versus -$1.92 in the prior year.
  • The revenue fell significantly faster than the industry average of 29.0%. Since the same quarter one year prior, revenues fell by 20.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

You can view the full analysis from the report here: LookSmart 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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