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Zacks.com featured highlights include Nutrien, Whiting Petroleum, Crocs and Silicon Motion
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 25, 2022 – Stocks in this week’s article are Nutrien (NTR - Free Report) , Whiting Petroleum , Crocs (CROX - Free Report) and Silicon Motion (SIMO - Free Report) .
4 High Earnings-Yield Value Picks to Counter Market Bloodbath
Market conditions continue to deteriorate amid escalating tensions between Russia and Ukraine. Both Dow and Nasdaq fell for the fifth straight session yesterday, undercutting their year-to-date low levels touched on Jan 24. The tech heavy-index finished the day down 2.6% at 13,037.49, while Dow Jones shed 1.4%. S&P 500 dropped further into the correction territory, falling 1.8% yesterday.
As Russia invades Ukraine, the already shaky market could be in for further turmoil. That might just create some good buying opportunities and it would be wise to invest in some value stocks like Nutrien, Whiting Petroleum, Crocs and Silicon Motion for long-term gains.
Before that let's delve deeper into the broader tensions that are crippling the stock market.
Geopolitical Tensions & Inflation Concerns to Blame
Yesterday, Russian President Putin began sending troops into the two breakaway regions of eastern Ukraine and the United States and its allies levied sanctions against Russia. U.S. and Germany also halted the certification of the Nord Stream 2 pipeline.
Early today, Putin declared the start of a “special military operation” in Ukraine, aimed at " demilitarization and denazification” of the country. He ordered the invasion of Ukraine and also warned outsiders of severe consequences in the event of any interference. Quoting him, “If you interfere, you will face consequences greater than any you have faced in history. All relevant decisions have been taken. I hope you hear me." President Biden responded,, “Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering.”
Investors are already worried about record inflation and the Fed’s hawkish stance. Several economists and financial experts are concerned that the Fed may hike the rate by 50 basis points four times this year or 25 basis points seven or eight times this year. High oil prices, flirting around $100 a barrel, are only making the inflation concerns grow.
And now with Russia launching a full-scale invasion, global stock markets are set for a further downside. A senior global macro strategist at Truist, Eylem Senyuz, said, “historically military/crisis events tend to inject volatility into markets and often cause a short-term dip, but stocks tend to eventually rebound unless the event pushes the economy into recession.”
Well, time will tell. But investors should brace themselves for further correction amid this full-blown war. When a correction is significant, you could buy anything but you stand to gain the most if you pick value stocks with strong long-term potential.
Value Investing is the Key
Amid such escalating ongoing tensions and uncertainty, value investing could be one of the most effective investment approaches.
Value investing takes a long-term view and seeks to gauge the intrinsic value of the companies based on their fundamental strength, earnings potential and financials. It involves uncovering a firm’s true value, thus helping investors avoid knee-jerk reactions.
The strategy basically seeks to profit from investing in stocks that appear to be trading at a discount to their intrinsic values. Value investors benefit from identifying and buying stocks, which are underestimated by the equity market and are thus trading below their true value, and eventually make handsome returns when the stock price rises toward its intrinsic value to reflect actual fundamentals.
One of the most common valuation metrics to pick undervalued stocks with solid upside potential is the P/E ratio. However, there’s another interesting ratio that you can consider for ferreting out attractively valued stocks. And that is, earnings yield, which is nothing but the reciprocal of the P/E ratio, albeit a little more illuminating than the traditional P/E ratio.
Unlock Your Portfolio Value With Earnings Yield
Earnings yield is useful for investors concerned about the rate of return on investment. This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price — the inverse of the P/E ratio.
This metric measures the anticipated yield (or return) from earnings for each dollar invested in a stock today. While comparing stocks, if other factors are similar, the one with higher earnings yield is considered undervalued, while those with lower earnings yield are seen as overpriced.
Earnings yield has an edge over P/E ratio as the former also facilitates the comparison of stocks with fixed-income securities. Investors often compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns.
If the yield on a stock is lower than the 10-year Treasury yield, it would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued.In this situation, investing in the stock market would be a better option for a value investor.
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Nutrien, Whiting Petroleum, Crocs and Silicon Motion
For Immediate Release
Chicago, IL – February 25, 2022 – Stocks in this week’s article are Nutrien (NTR - Free Report) , Whiting Petroleum , Crocs (CROX - Free Report) and Silicon Motion (SIMO - Free Report) .
4 High Earnings-Yield Value Picks to Counter Market Bloodbath
Market conditions continue to deteriorate amid escalating tensions between Russia and Ukraine. Both Dow and Nasdaq fell for the fifth straight session yesterday, undercutting their year-to-date low levels touched on Jan 24. The tech heavy-index finished the day down 2.6% at 13,037.49, while Dow Jones shed 1.4%. S&P 500 dropped further into the correction territory, falling 1.8% yesterday.
As Russia invades Ukraine, the already shaky market could be in for further turmoil. That might just create some good buying opportunities and it would be wise to invest in some value stocks like Nutrien, Whiting Petroleum, Crocs and Silicon Motion for long-term gains.
Before that let's delve deeper into the broader tensions that are crippling the stock market.
Geopolitical Tensions & Inflation Concerns to Blame
Yesterday, Russian President Putin began sending troops into the two breakaway regions of eastern Ukraine and the United States and its allies levied sanctions against Russia. U.S. and Germany also halted the certification of the Nord Stream 2 pipeline.
Early today, Putin declared the start of a “special military operation” in Ukraine, aimed at " demilitarization and denazification” of the country. He ordered the invasion of Ukraine and also warned outsiders of severe consequences in the event of any interference. Quoting him, “If you interfere, you will face consequences greater than any you have faced in history. All relevant decisions have been taken. I hope you hear me." President Biden responded,, “Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering.”
Investors are already worried about record inflation and the Fed’s hawkish stance. Several economists and financial experts are concerned that the Fed may hike the rate by 50 basis points four times this year or 25 basis points seven or eight times this year. High oil prices, flirting around $100 a barrel, are only making the inflation concerns grow.
And now with Russia launching a full-scale invasion, global stock markets are set for a further downside. A senior global macro strategist at Truist, Eylem Senyuz, said, “historically military/crisis events tend to inject volatility into markets and often cause a short-term dip, but stocks tend to eventually rebound unless the event pushes the economy into recession.”
Well, time will tell. But investors should brace themselves for further correction amid this full-blown war. When a correction is significant, you could buy anything but you stand to gain the most if you pick value stocks with strong long-term potential.
Value Investing is the Key
Amid such escalating ongoing tensions and uncertainty, value investing could be one of the most effective investment approaches.
Value investing takes a long-term view and seeks to gauge the intrinsic value of the companies based on their fundamental strength, earnings potential and financials. It involves uncovering a firm’s true value, thus helping investors avoid knee-jerk reactions.
The strategy basically seeks to profit from investing in stocks that appear to be trading at a discount to their intrinsic values. Value investors benefit from identifying and buying stocks, which are underestimated by the equity market and are thus trading below their true value, and eventually make handsome returns when the stock price rises toward its intrinsic value to reflect actual fundamentals.
One of the most common valuation metrics to pick undervalued stocks with solid upside potential is the P/E ratio. However, there’s another interesting ratio that you can consider for ferreting out attractively valued stocks. And that is, earnings yield, which is nothing but the reciprocal of the P/E ratio, albeit a little more illuminating than the traditional P/E ratio.
Unlock Your Portfolio Value With Earnings Yield
Earnings yield is useful for investors concerned about the rate of return on investment. This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price — the inverse of the P/E ratio.
This metric measures the anticipated yield (or return) from earnings for each dollar invested in a stock today. While comparing stocks, if other factors are similar, the one with higher earnings yield is considered undervalued, while those with lower earnings yield are seen as overpriced.
Earnings yield has an edge over P/E ratio as the former also facilitates the comparison of stocks with fixed-income securities. Investors often compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns.
If the yield on a stock is lower than the 10-year Treasury yield, it would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued.In this situation, investing in the stock market would be a better option for a value investor.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1872407/4-high-earnings-yield-value-picks-to-counter-market-bloodbath
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.