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."

USA Compression Partners

Dividend Yield: 14.40%

USA Compression Partners

(NYSE:

USAC

) shares currently have a dividend yield of 14.40%.

USA Compression Partners, LP provides natural gas compression services under term contracts with customers in the oil and gas industry in the United States. It engineers, designs, operates, services, and repairs its compression units and maintains related support inventory and equipment.

The average volume for USA Compression Partners has been 134,800 shares per day over the past 30 days. USA Compression Partners has a market cap of $789.6 million and is part of the energy industry. Shares are up 31.3% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates

USA Compression Partners

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, USAC maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
  • 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, USA COMPRESSION PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of USA COMPRESSION PRTNRS LP has not done very well: it is down 23.23% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when 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.
  • USA COMPRESSION PRTNRS LP's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, USA COMPRESSION PRTNRS LP swung to a loss, reporting -$2.93 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus -$2.93).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 25.5% when compared to the same quarter one year ago, falling from $11.46 million to $8.54 million.

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Stonemor Partners

Dividend Yield: 10.50%

Stonemor Partners

(NYSE:

STON

) shares currently have a dividend yield of 10.50%.

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 173,800 shares per day over the past 30 days. Stonemor Partners has a market cap of $882.5 million and is part of the diversified services industry. Shares are down 5% year-to-date as of the close of trading on Friday.

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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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • Net operating cash flow has decreased to $5.23 million or 10.57% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, STONEMOR PARTNERS LP has marginally lower results.
  • STON has underperformed the S&P 500 Index, declining 15.55% 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.
  • STONEMOR PARTNERS LP has improved earnings per share by 23.3% in the most recent quarter compared to the same quarter a year ago. 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, STONEMOR PARTNERS LP reported poor results of -$0.79 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings (-$0.36 versus -$0.79).
  • Despite the current debt-to-equity ratio of 1.84, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Consumer Services industry. Despite the fact that STON's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.00 is high and demonstrates strong liquidity.

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Communications Systems

Dividend Yield: 8.80%

Communications Systems

(NASDAQ:

JCS

) shares currently have a dividend yield of 8.80%.

Communications Systems, Inc., together with its subsidiaries, manufactures and sells connectivity infrastructure products, core media and rate conversion products, and IT solutions primarily in North America, Europe, the Middle East, and Africa. The company has a P/E ratio of 16.84.

The average volume for Communications Systems has been 14,800 shares per day over the past 30 days. Communications Systems has a market cap of $63.9 million and is part of the telecommunications industry. Shares are down 7.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Communications Systems

as a

sell

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

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 Communications Equipment industry and the overall market, COMMUNICATIONS SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$3.48 million or 20.78% 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.
  • The gross profit margin for COMMUNICATIONS SYSTEMS INC is currently lower than what is desirable, coming in at 30.95%. Regardless of JCS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, JCS's net profit margin of -10.00% significantly underperformed when compared to the industry average.
  • JCS'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 30.68%, 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. 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.
  • COMMUNICATIONS SYSTEMS INC has improved earnings per share by 41.7% in the most recent quarter compared to the same quarter a year ago. 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, COMMUNICATIONS SYSTEMS INC swung to a loss, reporting -$1.11 versus $0.23 in the prior year. This year, the market expects an improvement in earnings (-$0.29 versus -$1.11).

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