NEW YORK (TheStreet) -- After a brief respite, market volatility is back, which means investors should buckle up for the ride if they own risky stocks.

Tech stocks, in particular, have been notoriously risky. But that doesn't mean they should be avoided altogether.

The U.S. internet software and services industry specifically is "highly competitive and characterized by rapid technological changes, evolving industry standards, and frequent new product and service developments," according to TheStreet Ratings, a proprietary research and ratings tool by TheStreet. We all know the major players: Google (GOOGL - Get Report), eBay (EBAY) and Yahoo! (YHOO).

"Looking forward, companies' success will depend on their ability to adopt rapidly evolving technologies, alter services to meet industry standards, and improve the performance and reliability of services," TheStreet Ratings says. "Investment in research and development will continue to be an integral part of company and industry success."

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

The stocks on this list are all internet software and services stocks with Buy, B or better ratings and a beta measurement greater than 1. The companies are listed in order of increasing beta. Year-to-date returns are based on March 25, 2015 closing prices.

EGOV Chart EGOV data by YCharts

1. NIC Inc. (EGOV - Get Report)
Rating: Buy, B
Market Cap: $1.1 billion
Beta: 1.06
Year-to-date return: -3.3%

NIC Inc., together with its subsidiaries, provides eGovernment services that enable governments to use the Internet to provide various services to businesses and citizens in the United States.

"We rate NIC INC (EGOV) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NIC INC has improved earnings per share by 33.3% 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. We feel that this trend should continue. During the past fiscal year, NIC INC increased its bottom line by earning $0.59 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($0.62 versus $0.59).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 34.1% when compared to the same quarter one year prior, rising from $6.18 million to $8.29 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.6%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EGOV 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, EGOV has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Internet Software & Services industry and the overall market, NIC INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

 

GOOGL Chart GOOGL data by YCharts

2. Google (GOOGL - Get Report)
Rating: Buy, B+
Market Cap: $384 billion
Beta: 1.07
Year-to-date return: 6.8%

Google Inc., a technology company, builds products and provides services to organize the information.

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same (AKAM - Get Report) one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 40.9% when compared to the same quarter one year prior, rising from $3,376.00 million to $4,757.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 15.3%. 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.
  • GOOGL's debt-to-equity ratio is very low at 0.05 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 4.52, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for GOOGLE INC is rather high; currently it is at 63.86%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.27% is above that of the industry average.

 

AKAM Chart AKAM data by YCharts

3. Akami Technologies Inc. (AKAM - Get Report)
Rating: Buy, A
Market Cap: $12.7 billion
Beta: 1.10
Year-to-date return: 12.2%

Akamai Technologies, Inc. provides cloud services for delivering, optimizing, and securing online content and business applications in the United States and internationally.

"We rate AKAMAI TECHNOLOGIES INC (AKAM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, growth in earnings per share and reasonable valuation levels. 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 the analysis by TheStreet Ratings Team goes as follows:

  • AKAM's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 23.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although AKAM's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AKAMAI TECHNOLOGIES INC has improved earnings per share by 22.7% 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 two years. We feel that this trend should continue. During the past fiscal year, AKAMAI TECHNOLOGIES INC increased its bottom line by earning $1.84 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus $1.84).

 

YHOO Chart YHOO data by YCharts

4. Yahoo! (YHOO)
Rating: Buy, B
Market Cap: $41.8 billion
Beta: 1.10
Year-to-date return: -12.5%

Yahoo! Inc. provides search and display advertising services on Yahoo properties and affiliate sites worldwide.

"We rate YAHOO INC (YHOO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • YHOO's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, YHOO has a quick ratio of 2.01, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Internet Software & Services industry and the overall market, YAHOO INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 84.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, YHOO's net profit margin of 13.27% significantly trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

 

CMPR Chart CMPR data by YCharts

5. Cimpress NV (CMPR - Get Report)
Rating: Buy, A-
Market Cap: $2.6 billion
Beta: 1.11
Year-to-date return: 8.5%

Vistaprint N.V. operates as an online supplier of coordinated portfolios of marketing products and services to micro businesses worldwide. Vistaprint N.V. is based in Venlo, the Netherlands.

"We rate CIMPRESS NV (CMPR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CMPR's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 18.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 60.16% and other important driving factors, this stock has surged by 66.14% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CMPR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CIMPRESS NV 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 two years. We feel that this trend should continue. During the past fiscal year, CIMPRESS NV increased its bottom line by earning $1.26 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($4.01 versus $1.26).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 55.6% when compared to the same quarter one year prior, rising from $40.88 million to $63.61 million.
  • 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, CIMPRESS NV's return on equity significantly exceeds that of both the industry average and the S&P 500.

 

 

CSGP Chart CSGP data by YCharts

6. CoStar Group Inc. (CSGP - Get Report)
Rating: Buy, B
Market Cap: $6.1 billion
Beta: 1.16
Year-to-date return: 2.4%

CoStar Group, Inc. provides information, analytics, and online marketplaces services to the commercial real estate industry in the United States, Canada, the United Kingdom, and France.

"We rate COSTAR GROUP INC (CSGP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, good cash flow from operations, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 35.0%. 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.
  • Although CSGP's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.75, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $47.87 million or 34.96% when compared to the same quarter last year. In addition, COSTAR GROUP INC has also modestly surpassed the industry average cash flow growth rate of 26.60%.
  • COSTAR GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, COSTAR GROUP INC increased its bottom line by earning $1.45 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.45).
  • The gross profit margin for COSTAR GROUP INC is currently very high, coming in at 80.13%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CSGP's net profit margin of 8.91% significantly trails the industry average.

 

JCOM Chart JCOM data by YCharts

7. J2 Global Inc. (JCOM - Get Report)
Rating: Buy, A+
Market Cap: $3.2 billion
Beta: 1.18
Year-to-date return: 7.5%

j2 Global, Inc. engages in the provision of Internet services worldwide. It operates through two segments, Business Cloud Services and Digital Media.

"We rate J2 GLOBAL INC (JCOM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • JCOM's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 21.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 41.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JCOM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • J2 GLOBAL INC 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. We feel that this trend should continue. During the past fiscal year, J2 GLOBAL INC increased its bottom line by earning $2.59 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $2.59).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 57.8% when compared to the same quarter one year prior, rising from $20.75 million to $32.75 million.
  • 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 Internet Software & Services industry and the overall market, J2 GLOBAL INC's return on equity exceeds that of both the industry average and the S&P 500.

 

 

STMP Chart STMP data by YCharts

8. Stamps.com Inc. (STMP - Get Report)
Rating: Buy, A-
Market Cap: $1.1 billion
Beta: 1.19
Year-to-date return: 41%

Stamps.com Inc. provides Internet-based postage solutions in the United States.

"We rate STAMPS.COM INC (STMP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, solid stock price performance, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 29.3%. 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.
  • STMP 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, STMP's share price has jumped by 64.16%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STMP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for STAMPS.COM INC is currently very high, coming in at 77.78%. Regardless of STMP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.26% trails the industry average.

 

 

PRFT Chart PRFT data by YCharts

9. Perificient Inc. (PRFT - Get Report)
Rating: Buy, B
Market Cap: $718.6 million
Beta: 1.53
Year-to-date return: 6.4%

Perficient, Inc. provides information technology consulting services to various enterprise companies in the United States.

"We rate PERFICIENT INC (PRFT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, reasonable valuation levels, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 29.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although PRFT's debt-to-equity ratio of 0.18 is very low, it is currently higher than that of the industry average. To add to this, PRFT has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.
  • PERFICIENT INC has improved earnings per share by 11.8% 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 two years. We feel that this trend should continue. During the past fiscal year, PERFICIENT INC increased its bottom line by earning $0.69 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $0.69).
  • In its most recent trading session, PRFT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

 

 

MELI Chart MELI data by YCharts

10. MercadoLibre Inc. (MELI - Get Report)
Rating: Buy, B
Market Cap: $5.3 billion
Beta: 1.55
Year-to-date return: -5.1%

MercadoLibre, Inc. hosts online commerce platforms in Latin America. It offers MercadoLibre Marketplace, an automated online e-commerce service for businesses and individuals to list items and conduct their sales and purchases online in a fixed-price or auction-based format.

"We rate MERCADOLIBRE INC (MELI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MELI's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 19.9%. 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.
  • Net operating cash flow has significantly increased by 196.74% to $58.35 million when compared to the same quarter last year. In addition, MERCADOLIBRE INC has also vastly surpassed the industry average cash flow growth rate of 26.60%.
  • MELI's debt-to-equity ratio of 0.80 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that MELI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
  • Compared to its closing price of one year ago, MELI's share price has jumped by 27.50%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for MERCADOLIBRE INC is currently very high, coming in at 73.31%. Regardless of MELI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.16% trails the industry average.

CTCT Chart CTCT data by YCharts

11. Constant Contact Inc. (CTCT)
Rating: Buy, B
Market Cap: $1.2 billion
Beta: 1.70
Year-to-date return: 3.7%

Constant Contact, Inc. provides online marketing tools that are designed for small organizations worldwide.

TheStreet Ratings team rates CONSTANT CONTACT INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONSTANT CONTACT INC (CTCT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. 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 the analysis by TheStreet Ratings Team goes as follows:

  • CONSTANT CONTACT INC has improved earnings per share by 35.7% 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. We feel that this trend should continue. During the past fiscal year, CONSTANT CONTACT INC increased its bottom line by earning $0.44 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($1.37 versus $0.44).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 38.4% when compared to the same quarter one year prior, rising from $4.52 million to $6.25 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CTCT 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. Along with this, the company maintains a quick ratio of 2.97, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 35.71% and other important driving factors, this stock has surged by 39.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

 

 

BIDU Chart BIDU data by YCharts

12. Baidu Inc. (BIDU - Get Report)
Rating: Buy, B
Market Cap: $72.5 billion
Beta: 1.78
Year-to-date return: -8.5%

Baidu, Inc. provides Internet search services. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People's Republic of China.

"We rate BAIDU INC (BIDU) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 36.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BAIDU INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $6.01 versus $4.96 in the prior year. This year, the market expects an improvement in earnings ($45.19 versus $6.01).
  • Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.05 is very high and demonstrates very strong liquidity.
  • 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 33.62% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for BAIDU INC is rather high; currently it is at 65.22%. Regardless of BIDU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.83% trails the industry average.

 

 

BITA Chart BITA data by YCharts

13. Bitauto Holdings Ltd. (BITA - Get Report)
Rating: Buy, B
Market Cap: $2.1 billion
Beta: 1.87
Year-to-date return: -28%

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People's Republic of China.

"We rate BITAUTO HOLDINGS LTD -ADR (BITA) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, notable return on equity, expanding profit margins and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BITA's very impressive revenue growth greatly exceeded the industry average of 18.6%. Since the same quarter one year prior, revenues leaped by 62.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BITA 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, BITA has a quick ratio of 2.13, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. In comparison to the other companies in the Internet Software & Services industry and the overall market, BITAUTO HOLDINGS LTD -ADR's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for BITAUTO HOLDINGS LTD -ADR is currently very high, coming in at 80.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 30.44% is above that of the industry average.
  • BITAUTO HOLDINGS LTD -ADR 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 two years. We feel that this trend should continue. During the past fiscal year, BITAUTO HOLDINGS LTD -ADR increased its bottom line by earning $0.95 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.95).