What To Hold: 3 Hold-Rated Dividend Stocks APTS, WHF, NTLS

 

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 "Hold."

 

Preferred Apartment Communities

 

Dividend Yield: 7.10%

 

Preferred Apartment Communities (AMEX: APTS) shares currently have a dividend yield of 7.10%.

 

Preferred Apartment Communities, Inc. is a real estate investment trust launched and managed by Preferred Apartment Advisors, LLC. The fund invests in real estate markets of the United States. It primarily acquires and operates multifamily apartment properties.

 

The average volume for Preferred Apartment Communities has been 74,200 shares per day over the past 30 days. Preferred Apartment Communities has a market cap of $147.4 million and is part of the real estate industry. Shares are up 11.9% year-to-date as of the close of trading on Wednesday.

 

TheStreet Ratings rates Preferred Apartment Communities as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

 

Highlights from the ratings report include:
  • APTS's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 90.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for PREFERRED APARTMENT CMNTYS is rather high; currently it is at 62.49%. It has increased significantly from the same period last year. Along with this, the net profit margin of 27.07% is above that of the industry average.
  • PREFERRED APARTMENT CMNTYS reported significant earnings per share improvement 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, PREFERRED APARTMENT CMNTYS reported poor results of -$2.02 versus -$0.17 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus -$2.02).
  • In its most recent trading session, APTS 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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, PREFERRED APARTMENT CMNTYS's return on equity significantly trails that of both the industry average and 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.

 

WhiteHorse Finance

 

Dividend Yield: 10.00%

 

WhiteHorse Finance (NASDAQ: WHF) shares currently have a dividend yield of 10.00%.

 

Whitehorse Finance, LLC is a fund of HIG Capital LLC. The company has a P/E ratio of 9.59.

 

The average volume for WhiteHorse Finance has been 66,500 shares per day over the past 30 days. WhiteHorse Finance has a market cap of $211.6 million and is part of the financial services industry. Shares are down 7% year-to-date as of the close of trading on Wednesday.

 

TheStreet Ratings rates WhiteHorse Finance as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

 

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 81.6% when compared to the same quarter one year prior, rising from $3.51 million to $6.37 million.
  • Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, WHITEHORSE FINANCE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • WHF, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • WHF has underperformed the S&P 500 Index, declining 10.76% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has significantly decreased to -$36.94 million or 106.76% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WHITEHORSE FINANCE INC has marginally lower results.

 

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

 

NTELOS Holdings

 

Dividend Yield: 12.40%

 

NTELOS Holdings (NASDAQ: NTLS) shares currently have a dividend yield of 12.40%. However, the company has decided to eliminate the dividend going forward.

 

NTELOS Holdings Corp., through its subsidiaries, provides digital wireless communications services to consumers and businesses in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio, and Kentucky. The company has a P/E ratio of 14.02.

 

The average volume for NTELOS Holdings has been 532,700 shares per day over the past 30 days. NTELOS Holdings has a market cap of $292.7 million and is part of the telecommunications industry. Shares are down 34.5% year-to-date as of the close of trading on Wednesday.

 

TheStreet Ratings rates NTELOS Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

 

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 2.3%. 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 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 Wireless Telecommunication Services industry and the overall market, NTELOS HOLDINGS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • NTELOS HOLDINGS 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. 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, NTELOS HOLDINGS CORP increased its bottom line by earning $1.12 versus $0.87 in the prior year. For the next year, the market is expecting a contraction of 58.0% in earnings ($0.47 versus $1.12).
  • Net operating cash flow has significantly decreased to $18.49 million or 55.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 27.83%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 76.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NTLS is still more expensive than most of the other companies in its industry.

 

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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