14 A+ Buy-Rated Tech Stocks to Jumpstart Your Portfolio in 2016

Editor's Pick: Originally Published Tuesday, Dec. 22.

Tech has been one of the best performing sectors in the S&P 500 Index this year, despite market volatility in the latter half of 2015 that continues to rock the stock market.

The S&P 500 Information Technology Index is up 5.2% for 2015, vs. a rise of 0.1% for the broader S&P 500. Eight of the 10 top-performing stocks in the broader index this year are technology or technology-related companies. Tech stocks, in general, have been good buys, but some are better investments than others, going forward.

The list below includes stocks within the technology sector that have A+ ratings by TheStreet Ratings, TheStreet's proprietary ratings tool. 

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 equity 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.

Check out the whole list of good tech buys. When you're done check out the large-cap stocks to sell before 2016.

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1. Avago Technologies (AVGO)
Industry: Technology/Semiconductors
2015 return: 45%

Avago Technologies designs, develops, and supplies semiconductor devices with a focus on analog III-V based products. The company operates through four segments: Wireless Communications, Wired Infrastructure, Enterprise Storage, and Industrial & Other segments.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate AVAGO TECHNOLOGIES LTD as a Buy with a ratings score of A+. 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, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. 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:

  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 15.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 228.00% and other important driving factors, this stock has surged by 41.91% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • AVAGO TECHNOLOGIES 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 two years. We feel that this trend should continue. During the past fiscal year, AVAGO TECHNOLOGIES LTD increased its bottom line by earning $4.90 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($9.68 versus $4.90).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 217.8% when compared to the same quarter one year prior, rising from $135.00 million to $429.00 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AVAGO TECHNOLOGIES LTD's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • You can view the full analysis from the report here: AVGO

 

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2. Convergys (CVG)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 20.7%

Convergys Corporation provides customer management services to communications and media, technology, financial services, retail, and healthcare industries in North America and internationally.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate CONVERGYS CORP as a Buy with a ratings score of A+. 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 solid stock price performance, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

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

  • Powered by its strong earnings growth of 96.42% and other important driving factors, this stock has surged by 28.12% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CONVERGYS 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 two years. We feel that this trend should continue. During the past fiscal year, CONVERGYS CORP increased its bottom line by earning $1.10 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $1.10).
  • CVG's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CVG has a quick ratio of 1.81, 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 IT Services industry and the overall market on the basis of return on equity, CONVERGYS CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: CVG

 

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3. Global Payments (GPN)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 58.2%

Global Payments Inc. provides payment solutions for credit cards, debit cards, electronic payments, and check-related services. It operates in two segments, North America Merchant Services and International Merchant Services.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate GLOBAL PAYMENTS INC as a Buy with a ratings score of A+. 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 revenue growth, impressive record of earnings per share growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its 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:

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues slightly increased by 6.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • GLOBAL PAYMENTS INC has improved earnings per share by 20.0% 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, GLOBAL PAYMENTS INC increased its bottom line by earning $2.06 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($2.97 versus $2.06).
  • Net operating cash flow has significantly increased by 908.83% to $513.39 million when compared to the same quarter last year. In addition, GLOBAL PAYMENTS INC has also vastly surpassed the industry average cash flow growth rate of -12.81%.
  • The gross profit margin for GLOBAL PAYMENTS INC is rather high; currently it is at 68.49%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.57% trails the industry average.
  • 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 62.07% 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.
  • You can view the full analysis from the report here: GPN

 

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4. GlobalSCAPE (GSB)
Industry: Technology/Systems Software
2015 return: 72.5%

GlobalSCAPE, Inc., together with its subsidiaries, develops and distributes software, delivers managed and hosted solutions, and provides associated services for secure information exchange for enterprises and consumers worldwide.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate GLOBALSCAPE INC as a Buy with a ratings score of A+. 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, notable return on equity, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

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

  • The revenue growth greatly exceeded the industry average of 16.7%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GSB 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 1.44, which illustrates the ability to avoid short-term cash problems.
  • 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 Software industry and the overall market, GLOBALSCAPE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 68.08% 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, GSB should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • You can view the full analysis from the report here: GSB

 

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5. J2 Global (JCOM)
Industry: Technology/Internet Software & Services
2015 return: 27.1%

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

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate J2 GLOBAL INC as a Buy with a ratings score of A+. 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. 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:

  • JCOM's revenue growth has slightly outpaced the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 16.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 28.33% and other important driving factors, this stock has surged by 26.99% 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 has improved earnings per share by 28.3% 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, 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 ($4.07 versus $2.59).
  • 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 29.9% when compared to the same quarter one year prior, rising from $28.76 million to $37.38 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.
  • You can view the full analysis from the report here: JCOM

 

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6. Jack Henry & Associates (JKHY)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 24.7%

Jack Henry & Associates Inc. provides technology solutions and payment processing services primarily for financial services organizations in the United States.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate HENRY (JACK) & ASSOCIATES as a Buy with a ratings score of A+. 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 revenue growth, growth in earnings per share, good cash flow from operations, expanding profit margins 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:

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues slightly increased by 6.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HENRY (JACK) & ASSOCIATES has improved earnings per share by 14.3% 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 two years. We feel that this trend should continue. During the past fiscal year, HENRY (JACK) & ASSOCIATES increased its bottom line by earning $2.60 versus $2.18 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.60).
  • Net operating cash flow has increased to $126.70 million or 36.01% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.81%.
  • The gross profit margin for HENRY (JACK) & ASSOCIATES is rather high; currently it is at 52.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.97% trails the industry average.
  • 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. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: JKHY

 

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7. Lam Research (LRCX)
Industry: Technology/Semiconductor Equipment
2015 return:  -0.74%

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing systems used in the fabrication of integrated circuits.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate LAM RESEARCH CORP as a Buy with a ratings score of A+. 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, growth in earnings per share, compelling growth in net income and attractive valuation levels. 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 greatly exceeded the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 38.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LRCX has a quick ratio of 2.38, which demonstrates the ability of the company to cover short-term liquidity needs.
  • LAM RESEARCH 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 two years. We feel that this trend should continue. During the past fiscal year, LAM RESEARCH CORP increased its bottom line by earning $3.70 versus $3.68 in the prior year. This year, the market expects an improvement in earnings ($6.01 versus $3.70).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 104.6% when compared to the same quarter one year prior, rising from $141.08 million to $288.68 million.
  • You can view the full analysis from the report here: LRCX

 

 

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8. MasterCard (MA)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 12.6%

MasterCard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate MASTERCARD INC as a Buy with a ratings score of A+. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel its 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 26.9%. Since the same quarter one year prior, revenues slightly increased by 1.6%. 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.
  • MA's debt-to-equity ratio is very low at 0.24 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 1.29, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the IT Services industry and the overall market, MASTERCARD INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for MASTERCARD INC is rather high; currently it is at 60.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.61% significantly outperformed against the industry average.
  • MASTERCARD 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, MASTERCARD INC increased its bottom line by earning $3.09 versus $2.57 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $3.09).
  • You can view the full analysis from the report here: MA

 

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9. NetEase (NTES)
Industry: Technology/Internet Software & Services
2015 return: 81.5%

NetEase, Inc., through its subsidiaries, operates an interactive online community in the People's Republic of China. The company operates in three segments: Online Game Services; Advertising Services; and E-mail, E-commerce and Others.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate NETEASE INC as a Buy with a ratings score of A+. 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, notable return on equity, solid stock price performance 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:

  • NTES's very impressive revenue growth greatly exceeded the industry average of 15.1%. Since the same quarter one year prior, revenues leaped by 100.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although NTES's debt-to-equity ratio of 0.08 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.97, which clearly demonstrates the ability to cover short-term cash 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, NETEASE INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 86.57% 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, NTES should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NETEASE 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 two years. We feel that this trend should continue. During the past fiscal year, NETEASE INC increased its bottom line by earning $5.84 versus $5.63 in the prior year. This year, the market expects an improvement in earnings ($48.83 versus $5.84).
  • You can view the full analysis from the report here: NTES

 

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10. Nvidia (NVDA)
Industry: Technology/Semiconductors
2015 return: 64%

NVIDIA Corporation operates as a visual computing company in the United States, Taiwan, China, the rest of Asia Pacific, Europe, and other Americas. The company operates through two segments, GPU and Tegra Processors.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate NVIDIA CORP as a Buy with a ratings score of A+. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, good cash flow from operations and expanding profit margins. We feel its 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 9.6%. Since the same quarter one year prior, revenues slightly increased by 6.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 6.16, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 42.2% when compared to the same quarter one year prior, rising from $172.97 million to $246.00 million.
  • Net operating cash flow has increased to $255.00 million or 18.26% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.29%.
  • The gross profit margin for NVIDIA CORP is rather high; currently it is at 59.92%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.85% trails the industry average.
  • You can view the full analysis from the report here: NVDA

 

 

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11. Paychex (PAYX)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 14%

Paychex, Inc. provides payroll, human resource, insurance, and benefits outsourcing solutions for small to medium-sized businesses in the United States and Germany.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate PAYCHEX INC as a Buy with a ratings score of A+. 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 revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins 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 the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • PAYCHEX INC has improved earnings per share by 23.4% 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, PAYCHEX INC increased its bottom line by earning $1.84 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.84).
  • The gross profit margin for PAYCHEX INC is currently very high, coming in at 75.28%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.92% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $278.30 million or 5.77% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.81%.
  • You can view the full analysis from the report here: PAYX

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12. Total System Services (TSS)

Industry: Technology/Data Processing & Outsourced Services
2015 return: 51%

Total System Services, Inc. provides electronic payment processing services to banks and other financial institutions in the United States, Europe, Canada, Mexico, and internationally.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate TOTAL SYSTEM SERVICES INC as a Buy with a ratings score of A+. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth 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 the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues rose by 14.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.76, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, TSS has a quick ratio of 2.40, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 47.72% and other important driving factors, this stock has surged by 60.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TOTAL SYSTEM SERVICES INC has improved earnings per share by 47.7% 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, TOTAL SYSTEM SERVICES INC increased its bottom line by earning $1.46 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.47 versus $1.46).
  • Net operating cash flow has increased to $175.26 million or 16.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.81%.
  • You can view the full analysis from the report here: TSS

 

TXN Chart TXN data by YCharts

13. Texas Instruments (TXN)
Industry: Technology/Semiconductors
2015 return: 4.4%

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates through two segments, Analog and Embedded Processing.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate TEXAS INSTRUMENTS INC as a Buy with a ratings score of A+. 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 largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations, solid stock price performance and expanding profit margins. 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:

  • The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, TXN has a quick ratio of 1.69, 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TEXAS INSTRUMENTS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has slightly increased to $1,409.00 million or 1.87% when compared to the same quarter last year. In addition, TEXAS INSTRUMENTS INC has also modestly surpassed the industry average cash flow growth rate of -5.29%.
  • TEXAS INSTRUMENTS INC reported flat earnings per share in the most recent 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, TEXAS INSTRUMENTS INC increased its bottom line by earning $2.58 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $2.58).
  • 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.
  • You can view the full analysis from the report here: TXN

 

V Chart V data by YCharts

14. Visa (V)
Industry: Technology/Data Processing & Outsourced Services
2015 return: 17.7%

Visa Inc., a payments technology company, operates an open-loop payments network worldwide. The company facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate VISA INC as a Buy with a ratings score of A+. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

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

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • V 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, V has a quick ratio of 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
  • VISA INC has improved earnings per share by 44.2% 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, VISA INC increased its bottom line by earning $2.57 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $2.57).
  • The gross profit margin for VISA INC is rather high; currently it is at 67.57%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 42.34% significantly outperformed against the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: V

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