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Image: Bigstock featured highlights include: Summit Hotel Properties, Meritage Homes, Eagle Pharm and BrightSphere Investment Group

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For Immediate Release

Chicago, IL – December 27, 2021 – Stocks in this week’s article are Summit Hotel Properties, Inc. (INN - Free Report) , Meritage Homes Corporation (MTH - Free Report) , Eagle Pharmaceuticals, Inc. (EGRX - Free Report) and BrightSphere Investment Group plc (BSIG - Free Report) .

4 High Earnings Yield Stocks Likely to Pay Off Big-Time

The price-to-earnings (P/E) ratio is often used by investors to pick undervalued stocks. Yet, it is difficult to use the P/E ratio to compare stocks with fixed income securities. This is where the inverse strategy — Earnings Yield — comes in handy.

Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. While comparing similar stocks, the one with higher earnings yield has the potential of providing comparatively greater returns. Summit Hotel PropertiesMeritage HomesEagle Pharm and BrightSphere Investment Group could be some attractive bets if you are looking for high earnings yield picks.

The earnings yield parameter 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 in comparison to bonds. In such a case, investing in the stock market would be a better option for a value investor.

You need to keep in mind that T-bills are safe bets while stock investments always have an element of risk. Hence, it would be prudent to add a risk premium to the Treasury yield while comparing it with the earnings yield of a stock or the overall market.

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