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These 5 High Earnings Yield Stocks are Good Investment Options
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The earnings potential of a stock is an important consideration while making investment decisions. This makes the Earnings Yield ratio a handy tool for stock selection.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. It is the inverse of the P/E ratio. While comparing similar stocks, the one with higher earnings yield has the potential of providing comparatively greater returns.
Earnings yield has an edge over P/E ratio as it can be used to compare a stock with not just other stocks but also with fixed income securities. This metric is often used to compare the performance of a market index with the 10-year Treasury yield.
For instance, if the yield of the market index is more than the 10-year Treasury, stocks can be considered as undervalued than bonds. In such a case, investing in the stock market would be a better option for a value investor.
However, bearing in mind the risk-free nature of T-bills, 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 overall market.
Screening Parameters
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 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 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Below we have highlighted five of the 79 stocks that made it through the screen.
Caleres (CAL - Free Report) : This Saint Louis-based company engages in the retail and wholesale of footwear. The Zacks Consensus Estimate for fiscal 2022 sales and earnings implies year-over-year growth of 28.5% and 335.7%, respectively. The company currently sports a Zacks Rank #1 and has a VGM Score of A.
Greif, Inc. (GEF - Free Report) : This Delaware-based company is a leading global producer of industrial packaging products, including remanufactured and reconditioned industrial containers and intermediate bulk containers. The Zacks Consensus Estimate for fiscal 2021 sales and earnings implies year-over-year growth of 20.1% and 63.7%, respectively. It currently sports a Zacks Rank #1 and has a VGM Score of B.
The Mosaic Company (MOS - Free Report) : This Minnesota-based company is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 44% and 473%, respectively. It currently sports a Zacks Rank #1 and has a VGM Score of B.
Avis Budget Group, Inc. (CAR - Free Report) : Headquartered in Parsippany, Avis Budget operates as a leading vehicle rental operator in North America, Europe and Australasia. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 56% and 321%, respectively. The company currently sports a Zacks Rank #1 and has a VGM Score of B.
Titan International, Inc. : Based in Illinois, the company is a leading global manufacturer of off-highway wheels, tires, assemblies and undercarriage products. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 31.6% and 155.6%, respectively. The company currently holds a Zacks Rank #2 and has a VGM Score of B.
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.
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These 5 High Earnings Yield Stocks are Good Investment Options
The earnings potential of a stock is an important consideration while making investment decisions. This makes the Earnings Yield ratio a handy tool for stock selection.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. It is the inverse of the P/E ratio. While comparing similar stocks, the one with higher earnings yield has the potential of providing comparatively greater returns.
Earnings yield has an edge over P/E ratio as it can be used to compare a stock with not just other stocks but also with fixed income securities. This metric is often used to compare the performance of a market index with the 10-year Treasury yield.
For instance, if the yield of the market index is more than the 10-year Treasury, stocks can be considered as undervalued than bonds. In such a case, investing in the stock market would be a better option for a value investor.
However, bearing in mind the risk-free nature of T-bills, 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 overall market.
Screening Parameters
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 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 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.
Our Choices
Below we have highlighted five of the 79 stocks that made it through the screen.
Caleres (CAL - Free Report) : This Saint Louis-based company engages in the retail and wholesale of footwear. The Zacks Consensus Estimate for fiscal 2022 sales and earnings implies year-over-year growth of 28.5% and 335.7%, respectively. The company currently sports a Zacks Rank #1 and has a VGM Score of A.
Greif, Inc. (GEF - Free Report) : This Delaware-based company is a leading global producer of industrial packaging products, including remanufactured and reconditioned industrial containers and intermediate bulk containers. The Zacks Consensus Estimate for fiscal 2021 sales and earnings implies year-over-year growth of 20.1% and 63.7%, respectively. It currently sports a Zacks Rank #1 and has a VGM Score of B.
The Mosaic Company (MOS - Free Report) : This Minnesota-based company is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 44% and 473%, respectively. It currently sports a Zacks Rank #1 and has a VGM Score of B.
Avis Budget Group, Inc. (CAR - Free Report) : Headquartered in Parsippany, Avis Budget operates as a leading vehicle rental operator in North America, Europe and Australasia. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 56% and 321%, respectively. The company currently sports a Zacks Rank #1 and has a VGM Score of B.
Titan International, Inc. : Based in Illinois, the company is a leading global manufacturer of off-highway wheels, tires, assemblies and undercarriage products. The Zacks Consensus Estimate for 2021 sales and earnings implies year-over-year growth of 31.6% and 155.6%, respectively. The company currently holds a Zacks Rank #2 and has a VGM Score of B.
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