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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."

Stonemor Partners

Dividend Yield: 10.90%

Stonemor Partners

(NYSE:

STON

) shares currently have a dividend yield of 10.90%.

StoneMor Partners L.P., together with its subsidiaries, owns and operates cemeteries in the United States. It operates through two segments, Cemetery Operations and Funeral Homes.

The average volume for Stonemor Partners has been 234,500 shares per day over the past 30 days. Stonemor Partners has a market cap of $789.8 million and is part of the diversified services industry. Shares are down 9.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Stonemor Partners

as a

sell

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

Highlights from the ratings report include:

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Diversified Consumer Services industry and the overall market, STONEMOR PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Currently the debt-to-equity ratio of 1.74 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, STON has managed to keep a strong quick ratio of 2.33, which demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to -$7.97 million or 110.23% when compared to the same quarter last year. Despite a decrease in cash flow of 110.23%, STONEMOR PARTNERS LP is still significantly exceeding the industry average of -378.11%.
  • STON has underperformed the S&P 500 Index, declining 21.16% 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.
  • 46.06% is the gross profit margin for STONEMOR PARTNERS LP which we consider to be strong. Regardless of STON's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STON's net profit margin of -8.97% significantly underperformed when compared to the industry average.

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Archrock Partners

Dividend Yield: 12.20%

Archrock Partners

(NASDAQ:

APLP

) shares currently have a dividend yield of 12.20%.

Archrock Partners, L.P., together with its subsidiaries, provides natural gas contract operations services to customers in the United States.

The average volume for Archrock Partners has been 322,200 shares per day over the past 30 days. Archrock Partners has a market cap of $764.4 million and is part of the energy industry. Shares are up 6.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

TheStreet Recommends

Archrock Partners

as a

sell

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

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 Energy Equipment & Services industry. The net income has significantly decreased by 828.9% when compared to the same quarter one year ago, falling from $18.93 million to -$137.94 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 Energy Equipment & Services industry and the overall market, ARCHROCK 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 2.61 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 2.88, which shows the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $42.88 million or 11.75% when compared to the same quarter last year. Despite a decrease in cash flow of 11.75%, ARCHROCK PARTNERS LP is still significantly exceeding the industry average of -86.93%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 966.66% compared to the year-earlier 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.

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Nordic American Offshore

Dividend Yield: 9.50%

Nordic American Offshore

(NYSE:

NAO

) shares currently have a dividend yield of 9.50%.

Nordic American Offshore Ltd. owns and operates platform supply vessels in the North Sea. It owns and operates eight vessels. The company was founded in 2013 and is based in Hamilton, Bermuda.

The average volume for Nordic American Offshore has been 95,100 shares per day over the past 30 days. Nordic American Offshore has a market cap of $113.9 million and is part of the transportation industry. Shares are up 0.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Nordic American Offshore

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, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • NORDIC AMERICAN OFFSHORE 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, NORDIC AMERICAN OFFSHORE swung to a loss, reporting -$0.46 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 87.2% in earnings (-$0.86 versus -$0.46).
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 157.8% when compared to the same quarter one year ago, falling from -$1.72 million to -$4.44 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, NORDIC AMERICAN OFFSHORE underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for NORDIC AMERICAN OFFSHORE is currently extremely low, coming in at 14.54%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -66.38% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$1.64 million or 125.48% 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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