3 Stocks Driving The Computer Software & Services 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 225 points (1.3%) at 17,417 as of Thursday, Jan. 29, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 2,093 issues advancing vs. 1,001 declining with 116 unchanged.

The Computer Software & Services industry as a whole closed the day up 0.8% versus the S&P 500, which was up 1.0%. Top gainers within the Computer Software & Services industry included GRAVITY ( GRVY), up 1.9%, QAD ( QADB), up 7.0%, MGT Capital Investments ( MGT), up 5.8%, The9 ( NCTY), up 6.7% and CollabRx ( CLRX), up 39.7%.

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

CollabRx ( CLRX) is one of the companies that pushed the Computer Software & Services industry higher today. CollabRx was up $0.31 (39.7%) to $1.09 on heavy volume. Throughout the day, 133,539 shares of CollabRx exchanged hands as compared to its average daily volume of 64,500 shares. The stock ranged in a price between $0.78-$1.09 after having opened the day at $0.78 as compared to the previous trading day's close of $0.78.

CollabRx, Inc. provides cloud-based expert systems to inform healthcare decision-making. The company's cloud-based expert systems provide clinical knowledge to institutions, physicians, researchers, and patients for genomics-based medicine in cancer. CollabRx has a market cap of $2.4 million and is part of the technology sector. Shares are up 28.6% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates CollabRx 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 CollabRx as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on CLRX 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 Health Care Technology industry. The net income has significantly decreased by 80.5% when compared to the same quarter one year ago, falling from -$0.56 million to -$1.02 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 Health Care Technology industry and the overall market, COLLABRX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$0.92 million or 46.32% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CLRX'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 78.90%, 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 revenue fell significantly faster than the industry average of 20.7%. Since the same quarter one year prior, revenues fell by 29.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

You can view the full analysis from the report here: CollabRx 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, The9 ( NCTY) was up $0.09 (6.7%) to $1.44 on light volume. Throughout the day, 19,131 shares of The9 exchanged hands as compared to its average daily volume of 31,200 shares. The stock ranged in a price between $1.37-$1.44 after having opened the day at $1.41 as compared to the previous trading day's close of $1.35.

The9 has a market cap of $32.4 million and is part of the technology sector. Shares are down 12.9% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

QAD ( QADB) was another company that pushed the Computer Software & Services industry higher today. QAD was up $1.13 (7.0%) to $17.39 on heavy volume. Throughout the day, 10,200 shares of QAD exchanged hands as compared to its average daily volume of 1,000 shares. The stock ranged in a price between $17.38-$20.00 after having opened the day at $20.00 as compared to the previous trading day's close of $16.26.

QAD Inc. provides enterprise software solutions for manufacturers in the automotive, consumer products, food and beverage, high technology, industrial products, and life sciences industries Worldwide. QAD has a market cap of $51.1 million and is part of the technology sector. Shares are down 13.5% year-to-date as of the close of trading on Wednesday. Currently there are 2 analysts who rate QAD a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates QAD 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, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from TheStreet Ratings analysis on QADB go as follows:

  • QADB's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 12.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QADB's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 148.4% when compared to the same quarter one year prior, rising from $2.05 million to $5.09 million.
  • Net operating cash flow has significantly increased by 70.55% to -$0.43 million when compared to the same quarter last year. In addition, QAD INC has also vastly surpassed the industry average cash flow growth rate of -2.01%.

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