Don't Miss Out: Top 3 Yielding Buy-Rated Stocks: TAL, SUNS, AHGP

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

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

Dividend Yield: 8.10%

TAL International Group (NYSE: TAL) shares currently have a dividend yield of 8.10%.

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 9.97.

The average volume for TAL International Group has been 198,400 shares per day over the past 30 days. TAL International Group has a market cap of $1.2 billion and is part of the diversified services industry. Shares are down 18.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates TAL International Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • TAL's revenue growth has slightly outpaced the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
  • Net operating cash flow has increased to $91.25 million or 22.59% 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 22.53%.
  • The gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 85.37%. Regardless of TAL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TAL's net profit margin of 15.53% compares favorably to the industry average.
  • 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 Trading Companies & Distributors industry and the overall market on the basis of return on equity, TAL INTERNATIONAL GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TAL has underperformed the S&P 500 Index, declining 18.76% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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Solar Senior Capital

Dividend Yield: 8.60%

Solar Senior Capital (NASDAQ: SUNS) shares currently have a dividend yield of 8.60%.

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. The company has a P/E ratio of 14.15.

The average volume for Solar Senior Capital has been 36,400 shares per day over the past 30 days. Solar Senior Capital has a market cap of $189.3 million and is part of the financial services industry. Shares are up 9.6% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Solar Senior Capital as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • SUNS's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The gross profit margin for SOLAR SENIOR CAPITAL LTD is currently very high, coming in at 76.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 66.51% significantly outperformed against the industry average.
  • SOLAR SENIOR CAPITAL LTD reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SOLAR SENIOR CAPITAL LTD reported lower earnings of $1.02 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.37 versus $1.02).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Capital Markets industry average, but is greater than that of the S&P 500. The net income increased by 2.5% when compared to the same quarter one year prior, going from $3.99 million to $4.09 million.
  • In its most recent trading session, SUNS 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, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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Alliance Holdings GP

Dividend Yield: 8.50%

Alliance Holdings GP (NASDAQ: AHGP) shares currently have a dividend yield of 8.50%.

Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. The company has a P/E ratio of 9.42.

The average volume for Alliance Holdings GP has been 73,400 shares per day over the past 30 days. Alliance Holdings GP has a market cap of $2.7 billion and is part of the metals & mining industry. Shares are down 27.4% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Alliance Holdings GP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 38.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ALLIANCE HOLDINGS GP LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $161.06 million or 15.42% when compared to the same quarter last year. In addition, ALLIANCE HOLDINGS GP LP has also vastly surpassed the industry average cash flow growth rate of -53.28%.
  • 38.99% is the gross profit margin for ALLIANCE HOLDINGS GP LP which we consider to be strong. Regardless of AHGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AHGP's net profit margin of 11.69% compares favorably to the industry average.

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