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4 High Earnings Yield Stocks to Boost Your Portfolio
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Some financial parameters are vital in making a prudent investment decision. In fact, sometimes investors are clueless about whether to put their money in stocks or bonds. In such a situation, a correct financial metric can show the right direction. One such financial parameter is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. In fact, this ratio comes in handy in tracking undervalued stocks. It is also very useful for comparing stocks with market or fixed income securities.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. This is very helpful in comparing stocks belonging to the same sector or industry. The stock with higher earnings yield is likely to produce better returns.
This ratio is also useful for comparing the performance of a market index with the 10-year Treasury yield. When the yield of the market index is more than the 10-year Treasury yield, the stocks can be considered as undervalued in comparison to bonds. This gives an indication that investing in the stock market is a better option for a value investor.
Investment in Treasury-bills is free of risks. However, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to 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 9% 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 14 stocks that made it through the screen:
Tata Motors Limited is India’s leading automotive manufacturer. It has a Zacks Rank #2 and an expected EPS growth rate of 45.7% 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.
Lake Success, NY-based Newtek Business Services Corp. (NEWT - Free Report) is a financial services company. It has a Zacks Rank #2 and an expected EPS growth rate of 3% for the next 3–5 years.
The Chemours Company (CC - Free Report) is engaged in the chemical business. It has a Zacks Rank #2 and an expected EPS growth rate of 15.5% 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 »
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4 High Earnings Yield Stocks to Boost Your Portfolio
Some financial parameters are vital in making a prudent investment decision. In fact, sometimes investors are clueless about whether to put their money in stocks or bonds. In such a situation, a correct financial metric can show the right direction. One such financial parameter is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. In fact, this ratio comes in handy in tracking undervalued stocks. It is also very useful for comparing stocks with market or fixed income securities.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. This is very helpful in comparing stocks belonging to the same sector or industry. The stock with higher earnings yield is likely to produce better returns.
This ratio is also useful for comparing the performance of a market index with the 10-year Treasury yield. When the yield of the market index is more than the 10-year Treasury yield, the stocks can be considered as undervalued in comparison to bonds. This gives an indication that investing in the stock market is a better option for a value investor.
Investment in Treasury-bills is free of risks. However, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to 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 9% 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 14 stocks that made it through the screen:
Tata Motors Limited is India’s leading automotive manufacturer. It has a Zacks Rank #2 and an expected EPS growth rate of 45.7% 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.
Lake Success, NY-based Newtek Business Services Corp. (NEWT - Free Report) is a financial services company. It has a Zacks Rank #2 and an expected EPS growth rate of 3% for the next 3–5 years.
The Chemours Company (CC - Free Report) is engaged in the chemical business. It has a Zacks Rank #2 and an expected EPS growth rate of 15.5% 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 »