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 "Buy."TAL International Group (NYSE: TAL) shares currently have a dividend yield of 6.80%. TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 10.50. The average volume for TAL International Group has been 565,700 shares per day over the past 30 days. TAL International Group has a market cap of $1.4 billion and is part of the diversified services industry. Shares are down 26.5% year-to-date as of the close of trading on Thursday. TheStreet Ratings rates TAL International Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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.
- The gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 87.59%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.08% significantly outperformed against the industry average.
- Net operating cash flow has increased to $74.43 million or 11.99% when compared to the same quarter last year. In addition, TAL INTERNATIONAL GROUP INC has also modestly surpassed the industry average cash flow growth rate of 6.90%.
- In its most recent trading session, TAL 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. 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.
- TAL INTERNATIONAL GROUP INC's earnings per share declined by 20.5% in the most recent quarter compared to 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, TAL INTERNATIONAL GROUP INC increased its bottom line by earning $4.25 versus $3.87 in the prior year. For the next year, the market is expecting a contraction of 8.2% in earnings ($3.90 versus $4.25).
- You can view the full TAL International Group Ratings Report.
- The revenue growth came in higher than the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $36.28 million or 23.44% when compared to the same quarter last year. In addition, NAVIOS MARITIME PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -87.83%.
- The gross profit margin for NAVIOS MARITIME PARTNERS LP is currently very high, coming in at 92.27%. Regardless of NMM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NMM's net profit margin of 31.93% significantly outperformed against the industry.
- The net income growth from the same quarter one year ago has exceeded that of the Marine industry average, but is less than that of the S&P 500. The net income increased by 13.0% when compared to the same quarter one year prior, going from $16.25 million to $18.36 million.
- NMM's debt-to-equity ratio of 0.67 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 9.04 is very high and demonstrates very strong liquidity.
- You can view the full Navios Maritime Partners L.P Ratings Report.
- Net operating cash flow has increased to $13,984.00 million or 20.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.61%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- RDS.A's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
- ROYAL DUTCH SHELL PLC's earnings per share declined by 44.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ROYAL DUTCH SHELL PLC reported lower earnings of $5.18 versus $8.52 in the prior year. This year, the market expects an improvement in earnings ($14.16 versus $5.18).
- You can view the full Royal Dutch Shell Ratings Report.
- Our dividend calendar.