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."

Avianca Holdings

Dividend Yield: 13.60%

Avianca Holdings

(NYSE:

AVH

) shares currently have a dividend yield of 13.60%.

Avianca Holdings S.A., through its subsidiaries, provides air transportation services in North America, Central America, the Caribbean, Colombia, South America, and internationally.

The average volume for Avianca Holdings has been 387,800 shares per day over the past 30 days. Avianca Holdings has a market cap of $494.8 million and is part of the transportation industry. Shares are down 67.5% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Avianca Holdings

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 2.00 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, AVH has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$166.84 million or 475.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for AVIANCA HOLDINGS SA is currently lower than what is desirable, coming in at 29.27%. Regardless of AVH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AVH's net profit margin of 8.44% is significantly lower than the industry average.
  • AVH's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 63.31%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. 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.
  • 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 Airlines industry and the overall market, AVIANCA HOLDINGS SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Spark Energy

Dividend Yield: 7.70%

Spark Energy

(NASDAQ:

SPKE

) shares currently have a dividend yield of 7.70%.

Spark Energy, Inc., through its subsidiaries, operates as an independent retail energy services company in the United States. It operates through two segments, Retail Natural Gas and Retail Electricity. The company has a P/E ratio of 26.11.

The average volume for Spark Energy has been 32,000 shares per day over the past 30 days. Spark Energy has a market cap of $58.2 million and is part of the utilities industry. Shares are up 29.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

TST Recommends

Spark Energy

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 4.52 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, SPKE maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for SPARK ENERGY INC is rather low; currently it is at 16.22%. Regardless of SPKE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SPKE's net profit margin of 1.43% is significantly lower than the industry average.
  • Compared to its closing price of one year ago, SPKE's share price has jumped by 35.74%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • SPARK ENERGY INC's earnings per share declined by 11.4% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.64 versus -$2.19).
  • 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 Electric Utilities industry average. The net income increased by 23.8% when compared to the same quarter one year prior, going from $1.06 million to $1.31 million.

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Cypress Energy Partners

Dividend Yield: 17.50%

Cypress Energy Partners

(NYSE:

CELP

) shares currently have a dividend yield of 17.50%.

Cypress Energy Partners, L.P. provides saltwater disposal (SWD), and other water and environmental services in North America. It operates in two segments: Water and Environmental Services (W&ES), and Pipeline Inspection and Integrity Services (PI&IS).

The average volume for Cypress Energy Partners has been 28,400 shares per day over the past 30 days. Cypress Energy Partners has a market cap of $55.1 million and is part of the energy industry. Shares are down 40.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

Cypress Energy Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • 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 Commercial Services & Supplies industry. The net income has significantly decreased by 150.9% when compared to the same quarter one year ago, falling from $3.56 million to -$1.81 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 Commercial Services & Supplies industry and the overall market, CYPRESS ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 4.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.04, which shows the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.39%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% 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.
  • The gross profit margin for CYPRESS ENERGY PARTNERS LP is currently extremely low, coming in at 12.55%. Regardless of CELP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.87% trails the industry average.

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