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 to Strengthen Your Portfolio
Read MoreHide Full Article
There are some financial parameters that are very important in taking wise investment decision. Sometimes, investors are not sure whether to keep their money in stocks or bonds. In such cases, proper selection of financial metrics can show the right direction.
One such financial metric is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. In fact, this ratio is very useful in finding out undervalued stocks. It is also very handy for making a comparative analysis with the market or fixed income securities.
Earnings yield is measured as (Annual Earnings per Share/Market Price) x 100. This is very useful in comparing stocks coming from same sector or industry. The stock with higher earnings yield is likely to produce better returns.
This ratio can also be used 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.
Treasury-bills investment is free of risks. However, investing in stocks always comes with a caveat. Hence, it is an excellent 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 8% 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.
Here are four of the 15 stocks that made it through the screen:
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.
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.
TRI Pointe Group, Inc. (TPH - Free Report) is engaged in designing, construction and sale of single-family homes. This Zacks Rank #2 stock has an expected EPS growth rate of 11% for the next 3–5 years.
Hamilton, Bermuda-based Triton International Limited is engaged in offering acquisition, leasing, re-leasing, and sale of intermodal containers. It has a Zacks Rank #1 and an expected EPS growth rate of 7.5% 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
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
4 High Earnings Yield Stocks to Strengthen Your Portfolio
There are some financial parameters that are very important in taking wise investment decision. Sometimes, investors are not sure whether to keep their money in stocks or bonds. In such cases, proper selection of financial metrics can show the right direction.
One such financial metric is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. In fact, this ratio is very useful in finding out undervalued stocks. It is also very handy for making a comparative analysis with the market or fixed income securities.
Earnings yield is measured as (Annual Earnings per Share/Market Price) x 100. This is very useful in comparing stocks coming from same sector or industry. The stock with higher earnings yield is likely to produce better returns.
This ratio can also be used 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.
Treasury-bills investment is free of risks. However, investing in stocks always comes with a caveat. Hence, it is an excellent 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 8% 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 15 stocks that made it through the screen:
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.
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.
TRI Pointe Group, Inc. (TPH - Free Report) is engaged in designing, construction and sale of single-family homes. This Zacks Rank #2 stock has an expected EPS growth rate of 11% for the next 3–5 years.
Hamilton, Bermuda-based Triton International Limited is engaged in offering acquisition, leasing, re-leasing, and sale of intermodal containers. It has a Zacks Rank #1 and an expected EPS growth rate of 7.5% 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 »