We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Buy These 5 Value Stocks With High Earnings Yield Now
Read MoreHide Full Article
It's been nearly a year since the Federal Open Market Committee (FOMC) has maintained the Federal Funds rate within the range of 5.25% to 5.5%. Throughout this period, rates have remained steady as key inflation indicators have persistently stayed high. Inflation, particularly the personal consumption expenditures (PCE) price index, which the Fed targets at 2%, has remained elevated. Fed officials have made it clear over the past few months that they are in no hurry to lower the policy rate. The FOMC is unlikely to adjust rates at its upcoming meeting on June 11 and 12.
Amid high interest rates, value investing can be a viable strategy, particularly for investors with a long-term horizon and a focus on strong fundamentals. While high interest rates pose challenges, they also present opportunities for discerning investors to acquire quality stocks at attractive prices. By carefully evaluating intrinsic value, focusing on resilient companies and maintaining a patient approach, value investors can navigate the complexities of a high interest rate environment and potentially achieve significant returns over time.
While the P/E ratio is generally regarded as one of the most popular valuation metrics, there’s another interesting ratio that you can consider for ferreting out attractively valued stocks. And that is earnings yield. Consider unlocking your portfolio value with these five high-earnings yield stocks — Hanesbrands Inc. (HBI - Free Report) , Arko Corp. (ARKO - Free Report) , Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , Sylvamo Corporation (SLVM - Free Report) and SkyWest, Inc. (SKYW - Free Report) .
Understanding Earnings Yield
Earnings yield is measured as (Annual Earnings per Share/Market Price) x 100. While comparing similar stocks, the one with higher earnings yield is more likely to provide better returns. If other factors are similar, pick stocks with higher earnings yield as they are considered undervalued, while those with lower earnings yield are seen as overpriced.
While this ratio is vital for tracking undervalued stocks, it also comes in handy for comparing stocks with the market or fixed-income securities. For comparing the performance of a market index with the 10-year Treasury yield, this ratio is very useful. When the yield of the market index is higher than the 10-year Treasury yield, the stocks can be dubbed as undervalued in comparison to bonds. This indicates that investing in the stock market is a better choice for a value investor. Investment in Treasury-bill is risk-free. However, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to the Treasury yield while comparing it with the earnings yield of a stock or the broader market.
The Winning Strategy
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential of generating solid returns. So, we have added the following parameters to the screen:
Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.
Average Daily Volume (20 Days) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Our Top Picks for High-Earnings Yield Value Stocks
Here we discuss five of the 37 stocks that qualified the screen:
Handebrands Inc.
Hanesbrands engages in the design, manufacture and sale of apparel essentials for men, women and children in the United States and internationally. The Zacks Consensus Estimate for Hanesbrands’ 2024 and 2025 earnings implies year-over-year growth of 667% and 54%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 2 cents and 1 cent, respectively, over the past 30 days. HBI currently sports a Zacks Rank #1 and has a Value Score of A.
Arko Corp.
Arko operates convenience stores in the United States. The Zacks Consensus Estimate for ARKO’s 2024 earnings implies year-over-year growth of 125%. Estimates for 2024 and 2025 earnings per share have moved up by 45 cents and 42 cents, respectively, over the past 30 days. ARKO currently sports a Zacks Rank #1 and has a Value Score of A.
Great Lakes Dredge & Dock Corporation
Great Lakes provides dredging services in the United States and internationally. The Zacks Consensus Estimate for GLDD’s 2024 and 2025 earnings implies year-over-year growth of 421% and 16%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 15 cents and 16 cents, respectively, over the past 30 days. The stock currently sports a Zacks Rank #1 and has a Value Score of B.
Sylvamo Corporation
Sylvamo produces and markets uncoated freesheet for cut size, offset paper and pulp. The Zacks Consensus Estimate for SLVM’s 2024 and 2025 earnings implies year-over-year growth of 4% and 5%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 60 cents each over the past 30 days. The stock currently sports a Zacks Rank #1 and has a Value Score of A.
SkyWest, Inc.
SkyWest operates as a regional airline in the United States. The Zacks Consensus Estimate for SLVM’s 2024 and 2025 earnings implies year-over-year growth of 784% and 17%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 42 cents and 53 cents, respectively, over the past 60 days. SkyWest currently sports a Zacks Rank #1 and has a Value Score of A.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Buy These 5 Value Stocks With High Earnings Yield Now
It's been nearly a year since the Federal Open Market Committee (FOMC) has maintained the Federal Funds rate within the range of 5.25% to 5.5%. Throughout this period, rates have remained steady as key inflation indicators have persistently stayed high. Inflation, particularly the personal consumption expenditures (PCE) price index, which the Fed targets at 2%, has remained elevated. Fed officials have made it clear over the past few months that they are in no hurry to lower the policy rate. The FOMC is unlikely to adjust rates at its upcoming meeting on June 11 and 12.
Amid high interest rates, value investing can be a viable strategy, particularly for investors with a long-term horizon and a focus on strong fundamentals. While high interest rates pose challenges, they also present opportunities for discerning investors to acquire quality stocks at attractive prices. By carefully evaluating intrinsic value, focusing on resilient companies and maintaining a patient approach, value investors can navigate the complexities of a high interest rate environment and potentially achieve significant returns over time.
While the P/E ratio is generally regarded as one of the most popular valuation metrics, there’s another interesting ratio that you can consider for ferreting out attractively valued stocks. And that is earnings yield. Consider unlocking your portfolio value with these five high-earnings yield stocks — Hanesbrands Inc. (HBI - Free Report) , Arko Corp. (ARKO - Free Report) , Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , Sylvamo Corporation (SLVM - Free Report) and SkyWest, Inc. (SKYW - Free Report) .
Understanding Earnings Yield
Earnings yield is measured as (Annual Earnings per Share/Market Price) x 100. While comparing similar stocks, the one with higher earnings yield is more likely to provide better returns. If other factors are similar, pick stocks with higher earnings yield as they are considered undervalued, while those with lower earnings yield are seen as overpriced.
While this ratio is vital for tracking undervalued stocks, it also comes in handy for comparing stocks with the market or fixed-income securities. For comparing the performance of a market index with the 10-year Treasury yield, this ratio is very useful. When the yield of the market index is higher than the 10-year Treasury yield, the stocks can be dubbed as undervalued in comparison to bonds. This indicates that investing in the stock market is a better choice for a value investor. Investment in Treasury-bill is risk-free. However, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to the Treasury yield while comparing it with the earnings yield of a stock or the broader market.
The Winning Strategy
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential of generating solid returns. So, we have added the following parameters to the screen:
Our Top Picks for High-Earnings Yield Value Stocks
Here we discuss five of the 37 stocks that qualified the screen:
Handebrands Inc.
Hanesbrands engages in the design, manufacture and sale of apparel essentials for men, women and children in the United States and internationally. The Zacks Consensus Estimate for Hanesbrands’ 2024 and 2025 earnings implies year-over-year growth of 667% and 54%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 2 cents and 1 cent, respectively, over the past 30 days. HBI currently sports a Zacks Rank #1 and has a Value Score of A.
Arko Corp.
Arko operates convenience stores in the United States. The Zacks Consensus Estimate for ARKO’s 2024 earnings implies year-over-year growth of 125%. Estimates for 2024 and 2025 earnings per share have moved up by 45 cents and 42 cents, respectively, over the past 30 days. ARKO currently sports a Zacks Rank #1 and has a Value Score of A.
Great Lakes Dredge & Dock Corporation
Great Lakes provides dredging services in the United States and internationally. The Zacks Consensus Estimate for GLDD’s 2024 and 2025 earnings implies year-over-year growth of 421% and 16%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 15 cents and 16 cents, respectively, over the past 30 days. The stock currently sports a Zacks Rank #1 and has a Value Score of B.
Sylvamo Corporation
Sylvamo produces and markets uncoated freesheet for cut size, offset paper and pulp. The Zacks Consensus Estimate for SLVM’s 2024 and 2025 earnings implies year-over-year growth of 4% and 5%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 60 cents each over the past 30 days. The stock currently sports a Zacks Rank #1 and has a Value Score of A.
SkyWest, Inc.
SkyWest operates as a regional airline in the United States. The Zacks Consensus Estimate for SLVM’s 2024 and 2025 earnings implies year-over-year growth of 784% and 17%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 42 cents and 53 cents, respectively, over the past 60 days. SkyWest currently sports a Zacks Rank #1 and has a Value Score of A.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance