3 Telecommunications 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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 39 points (0.2%) at 17,554 as of Wednesday, Jan. 21, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,967 issues advancing vs. 1,121 declining with 130 unchanged.

The Telecommunications industry as a whole closed the day down 0.1% versus the S&P 500, which was up 0.5%. Top gainers within the Telecommunications industry included RRSat Global Communications Network ( RRST), up 1.6%, RELM Wireless ( RWC), up 4.3%, Gilat Satellite Networks ( GILT), up 1.8%, Elephant Talk Communications ( ETAK), up 3.7% and InfoSonics ( IFON), up 3.5%.

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

Gilat Satellite Networks ( GILT) is one of the companies that pushed the Telecommunications industry higher today. Gilat Satellite Networks was up $0.08 (1.8%) to $4.57 on heavy volume. Throughout the day, 62,650 shares of Gilat Satellite Networks exchanged hands as compared to its average daily volume of 17,500 shares. The stock ranged in a price between $4.42-$4.58 after having opened the day at $4.46 as compared to the previous trading day's close of $4.49.

Gilat Satellite Networks Ltd. and its subsidiaries provide Internet protocol (IP) based digital satellite communication and networking products and services worldwide. It designs, produces, and markets very small aperture terminals (VSATs) and related VSAT network equipment. Gilat Satellite Networks has a market cap of $194.3 million and is part of the technology sector. Shares are down 1.3% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Gilat Satellite Networks a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Gilat Satellite Networks as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on GILT go as follows:

  • Net operating cash flow has significantly decreased to -$9.88 million or 793.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • GILT has underperformed the S&P 500 Index, declining 7.34% from its price level of one year ago. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, GILAT SATELLITE NETWORKS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • 39.47% is the gross profit margin for GILAT SATELLITE NETWORKS LTD which we consider to be strong. Regardless of GILT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GILT's net profit margin of 0.30% is significantly lower than the industry average.
  • GILAT SATELLITE NETWORKS LTD 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, GILAT SATELLITE NETWORKS LTD continued to lose money by earning -$0.23 versus -$0.55 in the prior year.

You can view the full analysis from the report here: Gilat Satellite Networks 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, RELM Wireless ( RWC) was up $0.20 (4.3%) to $4.85 on heavy volume. Throughout the day, 104,011 shares of RELM Wireless exchanged hands as compared to its average daily volume of 16,800 shares. The stock ranged in a price between $4.50-$5.05 after having opened the day at $4.54 as compared to the previous trading day's close of $4.65.

RELM Wireless Corporation designs, manufactures, and markets wireless communications products under the BK Radio and RELM brand names in the United States and internationally. Its products include two-way land mobile radios, repeaters, base stations, and related components and subsystems. RELM Wireless has a market cap of $63.1 million and is part of the technology sector. Shares are down 3.1% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate RELM Wireless 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 RELM Wireless as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on RWC go as follows:

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RWC's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.89, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Communications Equipment industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $0.51 million to $0.66 million.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.84% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • RELM WIRELESS CORP has improved earnings per share by 25.0% 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, RELM WIRELESS CORP reported lower earnings of $0.08 versus $0.16 in the prior year.

You can view the full analysis from the report here: RELM Wireless 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.

RRSat Global Communications Network ( RRST) was another company that pushed the Telecommunications industry higher today. RRSat Global Communications Network was up $0.11 (1.6%) to $7.18 on light volume. Throughout the day, 365 shares of RRSat Global Communications Network exchanged hands as compared to its average daily volume of 7,300 shares. The stock ranged in a price between $7.18-$7.18 after having opened the day at $7.18 as compared to the previous trading day's close of $7.07.

RRsat Global Communications Network Ltd. provides digital media management and distribution services for broadcasters and content owners in North America, Europe, Asia, Israel, the Middle East, and internationally. RRSat Global Communications Network has a market cap of $123.5 million and is part of the technology sector. Shares are down 1.8% year-to-date as of the close of trading on Tuesday. Currently there is 1 analyst who rates RRSat Global Communications Network a buy, no analysts rate it a sell, and 1 rates it a hold.

TheStreet Ratings rates RRSat Global Communications Network as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on RRST go as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RRST 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. To add to this, RRST has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $3.56 million or 45.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.41%.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income increased by 6.1% when compared to the same quarter one year prior, going from $1.10 million to $1.17 million.

You can view the full analysis from the report here: RRSat Global Communications 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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