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.
4 High Earnings Yield Stocks That Investors Can Bank On
Read MoreHide Full Article
For investors who wish to keep their money in bonds or stocks, earnings yield is a very useful ratio. Mathematically speaking, it is the reciprocal of the price-to-earnings (P/E) ratio. It is very much suitable for tracking undervalued stocks. This ratio also comes very handy for comparing stocks with the market or fixed income securities.
Earnings yield is defined as (Annual Earnings per Share/Market Price) x 100. While comparing stocks from the same sector or industry, the one with higher earnings yield is likely to fetch better returns.
For comparing the performance of a market index with the 10-year Treasury yield, this ratio comes in handy. When the yield of the market index is higher than the 10-year Treasury yield, stocks can be considered as undervalued in comparison to bonds. This indicates that investing in the stock market is a better choice for a value investor.
However, while T-bills are risk free, investing in stocks always comes with a caveat. Hence, it would be 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 Earnings Yield greater than 10% as our primary screening criterion, but it alone cannot be used for picking stocks that have the potential to generate 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 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Current Price greater than or equal to $5.
Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment.
Here are four of the eight stocks that made it through the screen:
San Francisco, CA-based CAI International, Inc. is one of the world's leading intermodal freight container leasing and management companies. This Zacks Rank #1 stock has an expected EPS growth rate of 8% for the next 3–5 years.
Boise, ID-based Micron Technology, Inc. (MU - Free Report) is a semiconductor systems provider. It has a Zacks Rank #1 and an expected EPS growth rate of 10% for the next 3–5 years.
Volkswagen AG is an automobile manufacturer in Europe. This Zacks Rank #2 stock has an expected EPS growth rate of 8.9% for the next 3–5 years.
Pohang, South Korea-based POSCO (PKX - Free Report) is engaged in manufacturing hot and cold rolled steel products, heavy plate and other steel products for the construction and shipbuilding industries. This Zacks Rank #1 stock has an expected EPS growth rate of 5% for the next 3–5 years.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
4 High Earnings Yield Stocks That Investors Can Bank On
For investors who wish to keep their money in bonds or stocks, earnings yield is a very useful ratio. Mathematically speaking, it is the reciprocal of the price-to-earnings (P/E) ratio. It is very much suitable for tracking undervalued stocks. This ratio also comes very handy for comparing stocks with the market or fixed income securities.
Earnings yield is defined as (Annual Earnings per Share/Market Price) x 100. While comparing stocks from the same sector or industry, the one with higher earnings yield is likely to fetch better returns.
For comparing the performance of a market index with the 10-year Treasury yield, this ratio comes in handy. When the yield of the market index is higher than the 10-year Treasury yield, stocks can be considered as undervalued in comparison to bonds. This indicates that investing in the stock market is a better choice for a value investor.
However, while T-bills are risk free, investing in stocks always comes with a caveat. Hence, it would be 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 Earnings Yield greater than 10% as our primary screening criterion, but it alone cannot be used for picking stocks that have the potential to generate 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 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Current Price greater than or equal to $5.
Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four of the eight stocks that made it through the screen:
San Francisco, CA-based CAI International, Inc. is one of the world's leading intermodal freight container leasing and management companies. This Zacks Rank #1 stock has an expected EPS growth rate of 8% for the next 3–5 years.
Boise, ID-based Micron Technology, Inc. (MU - Free Report) is a semiconductor systems provider. It has a Zacks Rank #1 and an expected EPS growth rate of 10% for the next 3–5 years.
Volkswagen AG is an automobile manufacturer in Europe. This Zacks Rank #2 stock has an expected EPS growth rate of 8.9% for the next 3–5 years.
Pohang, South Korea-based POSCO (PKX - Free Report) is engaged in manufacturing hot and cold rolled steel products, heavy plate and other steel products for the construction and shipbuilding industries. This Zacks Rank #1 stock has an expected EPS growth rate of 5% for the next 3–5 years.
You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »