What To Sell: 3 Sell-Rated Dividend Stocks NGL, AHT, CBL

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 which could 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 "Sell."

NGL Energy Partners

Dividend Yield: 5.40%

NGL Energy Partners (NYSE: NGL) shares currently have a dividend yield of 5.40%.

NGL Energy Partners LP, through its subsidiaries, engages in propane and other natural gas liquids businesses in the United States. The company operates in four segments: Crude Oil Logistics, Water Services, Natural Gas Liquids Logistics, and Retail Propane. The company has a P/E ratio of 160.26.

The average volume for NGL Energy Partners has been 230,500 shares per day over the past 30 days. NGL Energy Partners has a market cap of $2.9 billion and is part of the energy industry. Shares are up 15.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates NGL Energy Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and poor profit margins.

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 against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 40.5% when compared to the same quarter one year ago, falling from $40.18 million to $23.90 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 Oil, Gas & Consumable Fuels industry and the overall market, NGL ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NGL ENERGY PARTNERS LP is currently extremely low, coming in at 6.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.87% trails that of the industry average.
  • NGL's debt-to-equity ratio of 1.00 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 0.81 is weak.
  • Compared to its closing price of one year ago, NGL's share price has jumped by 37.15%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.

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

Ashford Hospitality

Dividend Yield: 4.70%

Ashford Hospitality (NYSE: AHT) shares currently have a dividend yield of 4.70%.

Ashford Hospitality Trust, Inc. is a publicly owned real estate investment trust. The firm engages in investment and management of properties in the hospitality industry. It invests in the real estate markets of the United States.

The average volume for Ashford Hospitality has been 936,300 shares per day over the past 30 days. Ashford Hospitality has a market cap of $825.1 million and is part of the real estate industry. Shares are up 22.8% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Ashford Hospitality as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 37.8% when compared to the same quarter one year ago, falling from -$12.60 million to -$17.37 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 Real Estate Investment Trusts (REITs) industry and the overall market, ASHFORD HOSPITALITY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ASHFORD HOSPITALITY TRUST is currently extremely low, coming in at 6.67%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.64% is significantly below that of the industry average.
  • AHT has underperformed the S&P 500 Index, declining 17.47% 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.
  • AHT, with its decline in revenue, underperformed when compared the industry average of 6.8%. Since the same quarter one year prior, revenues fell by 15.4%. The declining revenue has not hurt the company's bottom line, with increasing 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.

CBL & Associates Properties

Dividend Yield: 5.50%

CBL & Associates Properties (NYSE: CBL) shares currently have a dividend yield of 5.50%.

CBL & Associates Properties, Inc. is a public real estate investment trust. It engages in acquisition, development, and management of properties. The fund invests in the real estate markets of United States. Its portfolio consists of enclosed malls and open-air centers. The company has a P/E ratio of 63.19.

The average volume for CBL & Associates Properties has been 2,985,500 shares per day over the past 30 days. CBL & Associates Properties has a market cap of $3.0 billion and is part of the real estate industry. Shares are down 1.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates CBL & Associates Properties as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 87.0% when compared to the same quarter one year ago, falling from $68.09 million to $8.84 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, CBL & ASSOCIATES PPTYS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CBL & ASSOCIATES PPTYS INC is rather low; currently it is at 23.37%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 3.08% significantly trails the industry average.
  • Net operating cash flow has decreased to $128.71 million or 20.49% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 103.22% 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.

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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