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The current market feels uncertain. Tech stocks have been under pressure as worries about an artificial intelligence bubble grow. At the same time, global tensions, trade disputes and rising inflation expectations are adding to the noise. In times like these, investors should turn to value investing. The strategy focuses on buying companies that are solid and trading at reasonable prices.
One useful way to spot such opportunities is by looking at earnings yield. Stocks like Plains GP Holdings, L.P. (PAGP - Free Report) , Heritage Insurance Holdings, Inc. (HRTG - Free Report) , The Mosaic Company (MOS - Free Report) , LATAM Airlines Group (LTM - Free Report) and PHINIA Inc. (PHIN - Free Report) boast high earnings yield and are likely to generate handsome long-term gains.
Understanding Earnings Yield
Earnings yield tells you how much a company earns for every dollar you invest in its stock. It is calculated by dividing a company's annual earnings per share (EPS) by its market price. The result, shown as a percentage, represents the return an investor can expect from earnings alone.
A higher earnings yield usually suggests that a stock may be undervalued, while a lower yield could point to an overvalued stock, assuming other fundamentals are equal. It’s essentially the flip side of the popular price-to-earnings (P/E) ratio, but it comes with a practical advantage.
Investors often compare earnings yield with bond yields, especially the 10-year U.S. Treasury yield, which is considered risk-free. If a stock’s earnings yield is lower than the Treasury yield, the stock may look less attractive. But if it’s higher, the stock could offer better value than bonds. For value investors, that makes earnings yield an important tool in spotting potential winners.
Setting the Right Filters
We have set an Earnings Yield greater than 10% 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 we have highlighted five of the 55 stocks that qualified the screen:
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminaling and marketing of crude oil and refined products. The Zacks Consensus Estimate for PAGP’s 2025 and 2026 earnings implies year-over-year growth of 215.4% and 27%, respectively. EPS estimates for the current and next year have moved up by 5 cents and 11 cents, respectively, over the past 30 days. Plains GP Holdings currently sports a Zacks Rank #1 and has a Value Score of A.
Heritage Insurance provides personal and commercial residential insurance products. The Zacks Consensus Estimate for HRTG’s 2025 and 2026 earnings calls for year-over-year growth of 104% and 1.2%, respectively. EPS estimates for the current and next year have moved northward by 85 cents and 47 cents, respectively, over the past 30 days. Heritage Insurance currently sports a Zacks Rank #1 and has a Value Score of A.
Mosaic is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. The Zacks Consensus Estimate for MOS’ 2025 earnings indicates year-over-year growth of 60%, respectively. EPS estimates for the current year have moved up by 37 cents over the past 30 days. Mosaic currently sports a Zacks Rank #1 and has a Value Score of A.
LATAM Airlines is Latin America’s leading airline, operating domestic services across Brazil, Chile, Peru, Colombia and Ecuador, as well as regional and long-haul flights. The Zacks Consensus Estimate for LTM’s 2025 and 2026 earnings suggests year-over-year growth of 45% and 19%, respectively. EPS estimates for the current and next year have been revised upward by 51 cents and 56 cents, respectively, over the past 30 days. LATAM Airlines currently sports a Zacks Rank #1 and has a Value Score of A.
PHINIA designs fuel systems for traditional & hybrid vehicles, improving efficiency and cutting emissions, while its Aftermarket unit offers parts, tools and diagnostics to OEMs and service clients. The Zacks Consensus Estimate for PHIN’s 2025 and 2026 earnings implies year-over-year growth of 18% each. EPS estimates for the current and next year have moved up by 38 cents and 28 cents, respectively, over the past 30 days. PHINIA currently sports a Zacks Rank #1 and has a Value Score of A.
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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Invest in Value With These 5 High Earnings Yield Stocks
Key Takeaways
The current market feels uncertain. Tech stocks have been under pressure as worries about an artificial intelligence bubble grow. At the same time, global tensions, trade disputes and rising inflation expectations are adding to the noise. In times like these, investors should turn to value investing. The strategy focuses on buying companies that are solid and trading at reasonable prices.
One useful way to spot such opportunities is by looking at earnings yield. Stocks like Plains GP Holdings, L.P. (PAGP - Free Report) , Heritage Insurance Holdings, Inc. (HRTG - Free Report) , The Mosaic Company (MOS - Free Report) , LATAM Airlines Group (LTM - Free Report) and PHINIA Inc. (PHIN - Free Report) boast high earnings yield and are likely to generate handsome long-term gains.
Understanding Earnings Yield
Earnings yield tells you how much a company earns for every dollar you invest in its stock. It is calculated by dividing a company's annual earnings per share (EPS) by its market price. The result, shown as a percentage, represents the return an investor can expect from earnings alone.
A higher earnings yield usually suggests that a stock may be undervalued, while a lower yield could point to an overvalued stock, assuming other fundamentals are equal. It’s essentially the flip side of the popular price-to-earnings (P/E) ratio, but it comes with a practical advantage.
Investors often compare earnings yield with bond yields, especially the 10-year U.S. Treasury yield, which is considered risk-free. If a stock’s earnings yield is lower than the Treasury yield, the stock may look less attractive. But if it’s higher, the stock could offer better value than bonds. For value investors, that makes earnings yield an important tool in spotting potential winners.
Setting the Right Filters
We have set an Earnings Yield greater than 10% 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.
Our Picks
Here we have highlighted five of the 55 stocks that qualified the screen:
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminaling and marketing of crude oil and refined products. The Zacks Consensus Estimate for PAGP’s 2025 and 2026 earnings implies year-over-year growth of 215.4% and 27%, respectively. EPS estimates for the current and next year have moved up by 5 cents and 11 cents, respectively, over the past 30 days. Plains GP Holdings currently sports a Zacks Rank #1 and has a Value Score of A.
Heritage Insurance provides personal and commercial residential insurance products. The Zacks Consensus Estimate for HRTG’s 2025 and 2026 earnings calls for year-over-year growth of 104% and 1.2%, respectively. EPS estimates for the current and next year have moved northward by 85 cents and 47 cents, respectively, over the past 30 days. Heritage Insurance currently sports a Zacks Rank #1 and has a Value Score of A.
Mosaic is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. The Zacks Consensus Estimate for MOS’ 2025 earnings indicates year-over-year growth of 60%, respectively. EPS estimates for the current year have moved up by 37 cents over the past 30 days. Mosaic currently sports a Zacks Rank #1 and has a Value Score of A.
LATAM Airlines is Latin America’s leading airline, operating domestic services across Brazil, Chile, Peru, Colombia and Ecuador, as well as regional and long-haul flights. The Zacks Consensus Estimate for LTM’s 2025 and 2026 earnings suggests year-over-year growth of 45% and 19%, respectively. EPS estimates for the current and next year have been revised upward by 51 cents and 56 cents, respectively, over the past 30 days. LATAM Airlines currently sports a Zacks Rank #1 and has a Value Score of A.
PHINIA designs fuel systems for traditional & hybrid vehicles, improving efficiency and cutting emissions, while its Aftermarket unit offers parts, tools and diagnostics to OEMs and service clients. The Zacks Consensus Estimate for PHIN’s 2025 and 2026 earnings implies year-over-year growth of 18% each. EPS estimates for the current and next year have moved up by 38 cents and 28 cents, respectively, over the past 30 days. PHINIA currently sports a Zacks Rank #1 and has a Value Score of A.
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.