4 Sell-Rated Dividend Stocks Taking The Lead: CAW, OIBR, STB, ACRE

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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 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 "Sell."

CCA Industries

Dividend Yield: 8.20%

CCA Industries (AMEX: CAW) shares currently have a dividend yield of 8.20%.

CCA Industries, Inc. engages in manufacturing and selling health and beauty aid products primarily in the United States and Canada.

The average volume for CCA Industries has been 8,100 shares per day over the past 30 days. CCA Industries has a market cap of $20.8 million and is part of the consumer non-durables industry. Shares are down 23.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates CCA Industries 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, feeble growth in its earnings per share 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 Personal Products industry. The net income has significantly decreased by 152.0% when compared to the same quarter one year ago, falling from $0.30 million to -$0.16 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 Personal Products industry and the overall market, CCA INDUSTRIES INC'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 $0.21 million or 88.77% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CCA INDUSTRIES 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. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, CCA INDUSTRIES INC reported lower earnings of $0.06 versus $0.07 in the prior year.
  • The share price of CCA INDUSTRIES INC has not done very well: it is down 21.92% 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Oi

Dividend Yield: 12.10%

Oi (NYSE: OIBR) shares currently have a dividend yield of 12.10%.

Oi S.A., through its subsidiaries, provides integrated telecommunication services for residential customers, companies, and governmental agencies in Brazil. It operates in three segments: Fixed-Line and Data Transmission Services, Mobile Services, and Other Services.

The average volume for Oi has been 4,437,900 shares per day over the past 30 days. Oi has a market cap of $3.8 billion and is part of the telecommunications industry. Shares are down 46.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Oi 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 and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • OI SA 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, OI SA reported lower earnings of $0.79 versus $0.92 in the prior year. For the next year, the market is expecting a contraction of 73.5% in earnings ($0.21 versus $0.79).
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 144.8% when compared to the same quarter one year ago, falling from $149.93 million to -$67.23 million.
  • The debt-to-equity ratio is very high at 3.28 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, OIBR has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity 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 49.89%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 144.44% 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, OI SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Student Transportation

Dividend Yield: 8.60%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.60%.

Student Transportation, Inc. provides school bus transportation and management services to public and private schools in North America. The company has a P/E ratio of 126.40.

The average volume for Student Transportation has been 160,300 shares per day over the past 30 days. Student Transportation has a market cap of $514.2 million and is part of the diversified services industry. Shares are up 2.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Student Transportation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • The share price of STUDENT TRANSPORTATION INC has not done very well: it is down 8.30% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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 Road & Rail industry. The net income has significantly decreased by 26.8% when compared to the same quarter one year ago, falling from $9.21 million to $6.75 million.
  • The gross profit margin for STUDENT TRANSPORTATION INC is currently lower than what is desirable, coming in at 29.85%. Regardless of STB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, STB's net profit margin of 5.51% is significantly lower than the industry average.
  • STUDENT TRANSPORTATION INC's earnings per share declined by 36.4% in the most recent quarter compared to 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, STUDENT TRANSPORTATION INC increased its bottom line by earning $0.03 versus $0.00 in the prior year.
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 18.2%. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Ares Commercial Real Estate

Dividend Yield: 7.90%

Ares Commercial Real Estate (NYSE: ACRE) shares currently have a dividend yield of 7.90%.

Ares Commercial Real Estate Corporation, a specialty finance company, operates as a real estate investment trust (REIT). It originates, invests in, and manages middle-market commercial real estate (CRE) loans and other commercial real estate investments. The company has a P/E ratio of 25.78.

The average volume for Ares Commercial Real Estate has been 426,200 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $352.2 million and is part of the real estate industry. Shares are down 23.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Ares Commercial Real Estate as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • ACRE'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 28.10%, 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.
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, ARES COMMERCIAL REAL ESTATE underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for ARES COMMERCIAL REAL ESTATE is rather high; currently it is at 55.72%. It has increased significantly from the same period last year. Along with this, the net profit margin of 40.37% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 263.71% to $0.79 million when compared to the same quarter last year. In addition, ARES COMMERCIAL REAL ESTATE has also vastly surpassed the industry average cash flow growth rate of 5.47%.
  • ARES COMMERCIAL REAL ESTATE reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.68 versus $0.10).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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