What To Sell: 3 Sell-Rated Dividend Stocks ASC, OHAI, TPUB

These 3 dividend stocks are rated a Sell by TheStreet
By TheStreet Wire ,

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Sell."

Ardmore Shipping

Dividend Yield: 8.60%

Ardmore Shipping

(NYSE:

ASC

) shares currently have a dividend yield of 8.60%.

Ardmore Shipping Corporation engages in the seaborne transportation of petroleum products and chemicals through product and chemical tankers worldwide. As of December 31, 2014, the company operated 14 vessels, as well as had 10 vessels under construction. The company has a P/E ratio of 22.98.

The average volume for Ardmore Shipping has been 219,000 shares per day over the past 30 days. Ardmore Shipping has a market cap of $378.1 million and is part of the transportation industry. Shares are up 19.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Ardmore Shipping

as a

sell

. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.12 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ASC's quick ratio is somewhat strong at 1.45, demonstrating the ability to handle 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 Oil, Gas & Consumable Fuels industry and the overall market, ARDMORE SHIPPING CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for ARDMORE SHIPPING CORP is rather high; currently it is at 57.84%. It has increased significantly from the same period last year. Along with this, the net profit margin of 28.82% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 9253.24% to $14.40 million when compared to the same quarter last year. In addition, ARDMORE SHIPPING CORP has also vastly surpassed the industry average cash flow growth rate of -19.63%.
  • This stock has managed to rise its share value by 46.11% over the past twelve months. Regarding the future course of this stock, we feel that the risks involved in investing in ASC do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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OHA Investment

Dividend Yield: 11.10%

OHA Investment

(NASDAQ:

OHAI

) shares currently have a dividend yield of 11.10%.

OHA Investment Corporation is a business development company specializing in investments in small and mid size and middle market private companies.

The average volume for OHA Investment has been 51,800 shares per day over the past 30 days. OHA Investment has a market cap of $87.1 million and is part of the financial services industry. Shares are down 8.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

OHA Investment

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • OHA INVESTMENT CORP's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, OHA INVESTMENT CORP swung to a loss, reporting -$1.08 versus $0.19 in the prior year.
  • 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 Capital Markets industry. The net income has significantly decreased by 1412.5% when compared to the same quarter one year ago, falling from -$0.03 million to -$0.48 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 Capital Markets industry and the overall market, OHA INVESTMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$6.27 million or 130.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • This stock's share value has moved by only 33.03% over the past year. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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Tribune Publishing

Dividend Yield: 7.10%

Tribune Publishing

(NYSE:

TPUB

) shares currently have a dividend yield of 7.10%.

Tribune Publishing Company, a multiplatform media and marketing solutions company, publishes and operates newspapers for audiences and advertisers.

The average volume for Tribune Publishing has been 259,300 shares per day over the past 30 days. Tribune Publishing has a market cap of $258.2 million and is part of the media industry. Shares are down 58.8% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Tribune Publishing

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • TRIBUNE PUBLISHING CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. For the next year, the market is expecting a contraction of 37.6% in earnings ($1.03 versus $1.65).
  • 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 Media industry. The net income has significantly decreased by 77.6% when compared to the same quarter one year ago, falling from $15.20 million to $3.40 million.
  • The debt-to-equity ratio is very high at 28.05 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TPUB maintains a poor quick ratio of 0.88, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for TRIBUNE PUBLISHING CO is currently extremely low, coming in at 5.88%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.82% significantly trails the industry average.
  • Net operating cash flow has declined marginally to $17.69 million or 9.05% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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