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 and 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 4 stocks with substantial yields, that ultimately, we have rated "Buy." Collectors Universe (NASDAQ: CLCT) shares currently have a dividend yield of 8.20%. Collectors Universe, Inc. provides authentication and grading services to dealers and collectors of high-value coins, trading cards, event tickets, autographs, memorabilia, and stamps in the United States. The company has a P/E ratio of 20.35. The average volume for Collectors Universe has been 55,400 shares per day over the past 30 days. Collectors Universe has a market cap of $134.7 million and is part of the diversified services industry. Shares are up 63.7% year to date as of the close of trading on Friday. TheStreet Ratings rates Collectors Universe as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results. Highlights from the ratings report include:
- 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 Diversified Consumer Services industry average. The net income increased by 37.0% when compared to the same quarter one year prior, rising from $1.74 million to $2.38 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.6%. Since the same quarter one year prior, revenues rose by 10.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CLCT 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, CLCT has a quick ratio of 1.95, 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 Diversified Consumer Services industry and the overall market, COLLECTORS UNIVERSE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- You can view the full Collectors Universe Ratings Report.
- MCC's very impressive revenue growth greatly exceeded the industry average of 12.4%. Since the same quarter one year prior, revenues leaped by 92.5%. 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.
- The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 68.08%. 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 13.38% trails the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
- MEDLEY CAPITAL CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, MEDLEY CAPITAL CORP increased its bottom line by earning $1.24 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $1.24).
- You can view the full Medley Capital Ratings Report.
- INTX's debt-to-equity ratio is very low at 0.02 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 1.48, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for INTERSECTIONS INC is rather high; currently it is at 66.33%. Regardless of INTX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.94% trails the industry average.
- INTERSECTIONS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, INTERSECTIONS INC increased its bottom line by earning $1.06 versus $0.97 in the prior year.
- INTX, with its decline in revenue, slightly underperformed the industry average of 7.4%. Since the same quarter one year prior, revenues slightly dropped by 7.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full Intersections Ratings Report.
- The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 1066.7% when compared to the same quarter one year prior, rising from $3.37 million to $39.32 million.
- Net operating cash flow has significantly increased by 335.73% to $62.58 million when compared to the same quarter last year. In addition, CAPITAL PRODUCT PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -17.92%.
- The gross profit margin for CAPITAL PRODUCT PARTNERS LP is rather high; currently it is at 65.02%. Regardless of CPLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPLP's net profit margin of 94.13% significantly outperformed against the industry.
- CPLP's debt-to-equity ratio of 0.76 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CPLP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.80 is high and demonstrates strong liquidity.
- You can view the full Capital Product Partners L.P Ratings Report.
- Our dividend calendar.