Don't Miss Out: Top 5 Yielding Sell-Rated Stocks: AMID, ACRE, SXE, STB, TAC

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 5 stocks with substantial yields, that ultimately, we have rated "Sell."

American Midstream Partners

Dividend Yield: 7.70%

American Midstream Partners (NYSE: AMID) shares currently have a dividend yield of 7.70%.

American Midstream Partners, LP engages in gathering, treating, processing, and transporting natural gas in the Gulf Coast and Southeast regions of the United States.

The average volume for American Midstream Partners has been 18,400 shares per day over the past 30 days. American Midstream Partners has a market cap of $110.8 million and is part of the utilities industry. Shares are up 75.9% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates American Midstream 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, generally high debt management risk, poor profit margins and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, AMERICAN MIDSTREAM PRTNRS LP'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 $1.16 million or 78.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • AMID's debt-to-equity ratio of 0.96 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.18 is very low and demonstrates very weak liquidity.
  • The gross profit margin for AMERICAN MIDSTREAM PRTNRS LP is currently extremely low, coming in at 7.93%. Regardless of AMID's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -3.35% trails the industry average.
  • AMERICAN MIDSTREAM PRTNRS LP has experienced 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN MIDSTREAM PRTNRS LP continued to lose money by earning -$0.71 versus -$1.24 in the prior year. For the next year, the market is expecting a contraction of 778.9% in earnings (-$6.24 versus -$0.71).

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: 7.60%

Ares Commercial Real Estate (NYSE: ACRE) shares currently have a dividend yield of 7.60%.

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 14.53.

The average volume for Ares Commercial Real Estate has been 307,300 shares per day over the past 30 days. Ares Commercial Real Estate has a market cap of $372.5 million and is part of the real estate industry. Shares are down 20.3% year-to-date as of the close of trading on Tuesday.

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 has underperformed the S&P 500 Index, declining 16.38% 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.
  • 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.
  • 43.68% is the gross profit margin for ARES COMMERCIAL REAL ESTATE which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 50.63% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 221.14% to $3.27 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 8.44%.
  • 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 ($0.86 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.

Southcross Energy Partners

Dividend Yield: 8.30%

Southcross Energy Partners (NYSE: SXE) shares currently have a dividend yield of 8.30%.

Southcross Energy Partners, L.P., a midstream natural gas company, provides natural gas gathering, processing, treating, compression, and transportation services in the United States. It also offers natural gas liquid (NGL) fractionation and transportation services. The company has a P/E ratio of 1.68.

The average volume for Southcross Energy Partners has been 29,700 shares per day over the past 30 days. Southcross Energy Partners has a market cap of $236.0 million and is part of the utilities industry. Shares are down 19.7% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Southcross Energy Partners as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for SOUTHCROSS ENERGY PRTNRS LP is currently extremely low, coming in at 5.66%. Regardless of SXE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.53% trails the industry average.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 0.7% when compared to the same quarter one year ago, dropping from -$4.04 million to -$4.07 million.
  • SXE's debt-to-equity ratio of 0.80 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.87 is weak.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOUTHCROSS ENERGY PRTNRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • SXE has underperformed the S&P 500 Index, declining 18.06% from its price level of one year ago.

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: 8.40%

Student Transportation (NASDAQ: STB) shares currently have a dividend yield of 8.40%.

Student Transportation Inc. provides school bus transportation services in North America. The company operates through two segments Transportation, and Oil and Gas. The Transportation segment provides school bus management services to public and private schools in North America. The company has a P/E ratio of 156.00.

The average volume for Student Transportation has been 115,000 shares per day over the past 30 days. Student Transportation has a market cap of $510.0 million and is part of the diversified services industry. Shares are up 1.6% year-to-date as of the close of trading on Tuesday.

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, deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • In its most recent trading session, STB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • 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 decreased by 15.5% when compared to the same quarter one year ago, dropping from -$7.61 million to -$8.79 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. Compared to other companies in the Road & Rail industry and the overall market, STUDENT TRANSPORTATION 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 -$21.11 million or 30.16% 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 STUDENT TRANSPORTATION INC is currently extremely low, coming in at 9.36%. 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 -12.02% significantly underperformed when compared to the industry average.

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

TransAlta Corporation

Dividend Yield: 8.40%

TransAlta Corporation (NYSE: TAC) shares currently have a dividend yield of 8.40%.

TransAlta Corporation operates as a non-regulated electricity generation and energy marketing company in Canada, the United States, and Australia. The company engages in the generation and wholesale trade of electricity and other energy-related commodities and derivatives. The company has a P/E ratio of 59.82.

The average volume for TransAlta Corporation has been 108,900 shares per day over the past 30 days. TransAlta Corporation has a market cap of $3.5 billion and is part of the utilities industry. Shares are down 13.9% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates TransAlta Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, unimpressive growth in net income and generally high debt management risk.

Highlights from the ratings report include:
  • The share price of TRANSALTA CORP has not done very well: it is down 14.48% 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.
  • TRANSALTA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, TRANSALTA CORP swung to a loss, reporting -$2.72 versus $1.30 in the prior year.
  • 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 Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 100.0% when compared to the same quarter one year ago, falling from $64.00 million to $0.00 million.
  • Even though the current debt-to-equity ratio is 1.40, it is still below the industry average, suggesting that this level of debt is acceptable within the Independent Power Producers & Energy Traders industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.46 is very low and demonstrates very weak liquidity.
  • 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. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, TRANSALTA CORP underperformed against that of the industry average and is significantly less than 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.

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