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." NGL Energy Partners (NYSE: NGL) shares currently have a dividend yield of 5.10%. NGL Energy Partners LP, through its subsidiaries, is primarily engaged in the crude oil logistics, water solutions, liquids, and retail propane businesses in the United States. It operates through Crude Oil Logistics, Water Solutions, Liquids, and Retail Propane segments. The company has a P/E ratio of 171.76. The average volume for NGL Energy Partners has been 463,500 shares per day over the past 30 days. NGL Energy Partners has a market cap of $3.6 billion and is part of the energy industry. Shares are up 23.9% year-to-date as of the close of trading on Monday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreet Ratings rates NGL Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- NGL's very impressive revenue growth greatly exceeded the industry average of 2.4%. Since the same quarter one year prior, revenues leaped by 163.3%. 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.
- Compared to its closing price of one year ago, NGL's share price has jumped by 47.67%, 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.
- NGL's debt-to-equity ratio of 0.82 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 0.91 is weak.
- The gross profit margin for NGL ENERGY PARTNERS LP is currently extremely low, coming in at 3.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.09% trails that of the industry average.
- Net operating cash flow has significantly decreased to $9.21 million or 64.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full NGL Energy Partners Ratings Report.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 190.8% when compared to the same quarter one year prior, rising from $3.28 million to $9.53 million.
- Net operating cash flow has increased to $44.31 million or 45.96% when compared to the same quarter last year. In addition, CYPRESS SEMICONDUCTOR CORP has also vastly surpassed the industry average cash flow growth rate of -8.94%.
- CYPRESS SEMICONDUCTOR CORP 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, CYPRESS SEMICONDUCTOR CORP reported poor results of -$0.33 versus -$0.16 in the prior year. This year, the market expects an improvement in earnings ($0.54 versus -$0.33).
- CY has underperformed the S&P 500 Index, declining 6.02% 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.
- The debt-to-equity ratio of 1.38 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CY has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Cypress Semiconductor Ratings Report.
- Net operating cash flow has significantly increased by 122.80% to $7.39 million when compared to the same quarter last year. In addition, CHENIERE ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -6.15%.
- The gross profit margin for CHENIERE ENERGY PARTNERS LP is rather high; currently it is at 56.79%. 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 -336.00% is in-line with the industry average.
- 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. 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.
- CHENIERE ENERGY PARTNERS 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CHENIERE ENERGY PARTNERS LP reported poor results of -$0.89 versus -$0.68 in the prior year. For the next year, the market is expecting a contraction of 106.7% in earnings (-$1.84 versus -$0.89).
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 381.2% when compared to the same quarter one year ago, falling from -$47.01 million to -$226.22 million.
- You can view the full Cheniere Energy Partners Ratings Report.
- Our dividend calendar.