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."AmeriGas Partners (NYSE: APU) shares currently have a dividend yield of 7.80%. AmeriGas Partners, L.P. operates as a retail and wholesale distributor of propane gas, and related equipment and supplies in the United States. The company has a P/E ratio of 20.02. The average volume for AmeriGas Partners has been 147,500 shares per day over the past 30 days. AmeriGas Partners has a market cap of $4.0 billion and is part of the utilities industry. Shares are up 11.9% year to date as of the close of trading on Friday. TheStreet Ratings rates AmeriGas Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, compelling growth in net income, impressive record of earnings per share growth and expanding profit margins. 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:
- Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was trading one year ago, APU is up 6.72% to its most recent closing price of 42.85. Looking ahead, although the push and pull of a bull or bear market could certainly alter the outcome, our view is that this stock's positive fundamentals give it good potential for further appreciation.
- The net income increased by 28.9% when compared to the same quarter one year prior, rising from -$76.00 million to -$54.06 million.
- AMERIGAS PARTNERS -LP has improved earnings per share by 26.7% 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 year. We feel that this trend should continue. During the past fiscal year, AMERIGAS PARTNERS -LP turned its bottom line around by earning $1.43 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $1.43).
- 35.66% is the gross profit margin for AMERIGAS PARTNERS -LP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year.
- You can view the full AmeriGas Partners Ratings Report.
- Since the same quarter one year prior, revenues leaped by 254.8%. 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.
- Net operating cash flow has significantly increased by 208.65% to $6.46 million when compared to the same quarter last year.
- 42.78% is the gross profit margin for CORENERGY INFRASTRUCTURE TR which we consider to be strong. It has increased from the same quarter the previous year.
- The net income has significantly decreased by 96.5% when compared to the same quarter one year ago, falling from $1.98 million to $0.07 million.
- 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.
- You can view the full CorEnergy Infrastructure Ratings Report.
- EXLP's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 16.6%. 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.
- Net operating cash flow has increased to $49.07 million or 47.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.72%.
- 40.91% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. 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 8.66% trails the industry average.
- EXTERRAN PARTNERS LP's earnings per share declined by 23.8% 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, EXTERRAN PARTNERS LP increased its bottom line by earning $0.14 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $0.14).
- EXLP's share price has surged by 32.96% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full Exterran Partners L.P Ratings Report.
- Our dividend calendar.