3 Technology Stocks Pushing Sector Growth

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.

Two out of the three major indices traded up today One out of the three major indices traded up today The three major indices are trading lower today with the Dow Jones Industrial Average ( ^DJI) trading down 10.22 points (-0.1%) at 17,540 as of Wednesday, Aug. 5, 2015, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,528 issues advancing vs. 1,554 declining with 135 unchanged.

The Technology sector as a whole closed the day up 0.8% versus the S&P 500, which was up 0.3%. Top gainers within the Technology sector included Qualstar ( QBAK), up 5.8%, Schmitt Industries ( SMIT), up 2.1%, TSR ( TSRI), up 2.5%, Authentidate ( ADAT), up 7.7% and Medical Transcription Billing ( MTBC), up 5.7%.

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

Medical Transcription Billing ( MTBC) is one of the companies that pushed the Technology sector higher today. Medical Transcription Billing was up $0.12 (5.7%) to $2.22 on average volume. Throughout the day, 8,689 shares of Medical Transcription Billing exchanged hands as compared to its average daily volume of 7,800 shares. The stock ranged in a price between $2.05-$2.22 after having opened the day at $2.08 as compared to the previous trading day's close of $2.10.

Medical Transcription Billing has a market cap of $23.5 million and is part of the computer software & services industry. Shares are down 10.3% year-to-date as of the close of trading on Tuesday.

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At the close, Authentidate ( ADAT) was up $0.01 (7.7%) to $0.14 on light volume. Throughout the day, 54,902 shares of Authentidate exchanged hands as compared to its average daily volume of 120,500 shares. The stock ranged in a price between $0.12-$0.15 after having opened the day at $0.13 as compared to the previous trading day's close of $0.13.

Authentidate Holding Corp. provides Web-based software applications, and telehealth products and services in the United States. Authentidate has a market cap of $6.6 million and is part of the computer software & services industry. Shares are down 83.3% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Authentidate a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Authentidate as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from TheStreet Ratings analysis on ADAT 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 54.9% when compared to the same quarter one year ago, falling from -$1.58 million to -$2.45 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, AUTHENTIDATE HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ADAT's debt-to-equity ratio of 0.68 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.28 is very low and demonstrates very weak liquidity.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 77.59%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% 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.
  • AUTHENTIDATE HOLDING CORP's earnings per share declined by 50.0% 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, AUTHENTIDATE HOLDING CORP continued to lose money by earning -$0.26 versus -$0.45 in the prior year.

You can view the full analysis from the report here: Authentidate Ratings Report

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Qualstar ( QBAK) was another company that pushed the Technology sector higher today. Qualstar was up $0.06 (5.8%) to $1.10 on average volume. Throughout the day, 2,199 shares of Qualstar exchanged hands as compared to its average daily volume of 1,600 shares. The stock ranged in a price between $1.03-$1.10 after having opened the day at $1.03 as compared to the previous trading day's close of $1.04.

Qualstar Corporation designs, develops, manufactures, and sells power supplies and data storage systems worldwide. It operates through two segments, Power Supplies and Tape Libraries. Qualstar has a market cap of $13.4 million and is part of the computer software & services industry. Shares are down 21.3% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Qualstar a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Qualstar as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on QBAK go as follows:

  • The gross profit margin for QUALSTAR CORP is currently lower than what is desirable, coming in at 34.97%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, QBAK's net profit margin of -17.36% significantly underperformed when compared to the industry average.
  • QBAK has underperformed the S&P 500 Index, declining 22.97% 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.
  • 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 Computers & Peripherals industry and the overall market, QUALSTAR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • QUALSTAR CORP 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, QUALSTAR CORP continued to lose money by earning -$0.47 versus -$0.85 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 77.5% when compared to the same quarter one year prior, rising from -$2.17 million to -$0.49 million.

You can view the full analysis from the report here: Qualstar Ratings Report

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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.

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