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 3 stocks with substantial yields, that ultimately, we have rated "Buy."SouFun Holdings (NYSE: SFUN) shares currently have a dividend yield of 4.10%. SouFun Holdings Limited operates a real estate Internet portal, and a home furnishing and improvement Website in the People's Republic of China. The company has a P/E ratio of 20.82. The average volume for SouFun Holdings has been 869,100 shares per day over the past 30 days. SouFun Holdings has a market cap of $4.0 billion and is part of the internet industry. Shares are up 95.7% year to date as of the close of trading on Friday. TheStreet Ratings rates SouFun Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 48.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 67.50% and other important driving factors, this stock has surged by 239.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SFUN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SOUFUN HLDGS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SOUFUN HLDGS LTD increased its bottom line by earning $1.87 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.78 versus $1.87).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 71.2% when compared to the same quarter one year prior, rising from $32.34 million to $55.37 million.
- The gross profit margin for SOUFUN HLDGS LTD is currently very high, coming in at 83.72%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.41% significantly outperformed against the industry average.
- You can view the full SouFun Holdings Ratings Report.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, CVI has a quick ratio of 2.09, which demonstrates the ability of the company to cover short-term liquidity needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CVR ENERGY INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- CVR ENERGY INC has improved earnings per share by 20.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CVR ENERGY INC increased its bottom line by earning $4.33 versus $3.94 in the prior year. This year, the market expects an improvement in earnings ($4.43 versus $4.33).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 18.5% when compared to the same quarter one year prior, going from $154.73 million to $183.37 million.
- You can view the full CVR Energy Ratings Report.
- LXP's revenue growth has slightly outpaced the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 18.4%. 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.
- This stock has managed to rise its share value by 20.65% over the past twelve months. 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.
- Net operating cash flow has slightly increased to $38.03 million or 2.62% when compared to the same quarter last year. Despite an increase in cash flow, LEXINGTON REALTY TRUST's average is still marginally south of the industry average growth rate of 5.48%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 49.3% when compared to the same quarter one year prior, rising from $4.51 million to $6.73 million.
- You can view the full Lexington Realty Ratings Report.
- Our dividend calendar.