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.
Investors often use P/E ratio and other valuation metrics while picking undervalued stocks with solid upside potential. However, its inverse, the Earnings Yield, is more useful for investors who play in both stocks and bonds as P/E ratio cannot be used to compare stocks with fixed income securities.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. Other things remaining constant, a stock with a higher earnings yield has the potential to provide comparatively greater returns.
Often, earnings yield is used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In such a circumstance, investing in the stock market would be a better option for a value investor.
However, you need to keep in mind that T-bills are risk free. 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 stock market.
The Winning Strategy
We have set Earnings Yield greater than 10% as our primary screening criterion, but it alone cannot be used for selecting 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 $5.00.
Zacks Rank less than 3: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally outperform their peers in any type of market environment.
Here are five of the 15 stocks that made it through the screen:
CVR Refining, LP is engaged in the refining of petroleum primarily in the U.S. The company carries a Zacks Rank #2. Its expected EPS growth rate for 3–5 years is 18.10%.
Korea Electric Power Corp. (KEP - Free Report) is an integrated electric utility engaged in the generation, transmission, distribution of electricity and development of electric power resources in South Korea. This Rank #2 stock has an expected EPS growth rate of 25% for the next 3–5 years.
Owens-Illinois Inc. (OI - Free Report) along with its subsidiaries is presently the largest manufacturer of glass containers in the world. The company carries a Zacks Rank #1 and its expected EPS growth rate for the next 3–5 years is 10.70%.
BG Staffing, Inc. (BGSF - Free Report) provides staffing services to a variety of industries through its various divisions. The company currently carries a Zacks Rank #1. Its expected EPS growth rate for 3–5 years is pegged at 20%.
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Free Report) is engaged in a wide variety of banking, financial and related activities in Spain. This Rank #2 company has an expected EPS growth rate of 20.3% 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
5 High Earnings Yield Stocks to Buy Now
Investors often use P/E ratio and other valuation metrics while picking undervalued stocks with solid upside potential. However, its inverse, the Earnings Yield, is more useful for investors who play in both stocks and bonds as P/E ratio cannot be used to compare stocks with fixed income securities.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. Other things remaining constant, a stock with a higher earnings yield has the potential to provide comparatively greater returns.
Often, earnings yield is used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In such a circumstance, investing in the stock market would be a better option for a value investor.
However, you need to keep in mind that T-bills are risk free. 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 stock market.
The Winning Strategy
We have set Earnings Yield greater than 10% as our primary screening criterion, but it alone cannot be used for selecting 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 $5.00.
Zacks Rank less than 3: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally outperform their peers in any type of market environment.
Here are five of the 15 stocks that made it through the screen:
CVR Refining, LP is engaged in the refining of petroleum primarily in the U.S. The company carries a Zacks Rank #2. Its expected EPS growth rate for 3–5 years is 18.10%.
Korea Electric Power Corp. (KEP - Free Report) is an integrated electric utility engaged in the generation, transmission, distribution of electricity and development of electric power resources in South Korea. This Rank #2 stock has an expected EPS growth rate of 25% for the next 3–5 years.
Owens-Illinois Inc. (OI - Free Report) along with its subsidiaries is presently the largest manufacturer of glass containers in the world. The company carries a Zacks Rank #1 and its expected EPS growth rate for the next 3–5 years is 10.70%.
BG Staffing, Inc. (BGSF - Free Report) provides staffing services to a variety of industries through its various divisions. The company currently carries a Zacks Rank #1. Its expected EPS growth rate for 3–5 years is pegged at 20%.
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Free Report) is engaged in a wide variety of banking, financial and related activities in Spain. This Rank #2 company has an expected EPS growth rate of 20.3% 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 »