For Immediate Release
Chicago, IL – January 10, 2019 – Stocks in this week’s article include Fifth Third Bancorp (FITB - Free Report) , GAIN Capital Holdings, Inc. (GCAP - Free Report) , American Airlines Group Inc. (AAL - Free Report) and Delta Air Lines, Inc. (DAL - Free Report) . Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
4 High Earnings Yield Stocks to Strengthen Your Portfolio
If you are uncertain about whether to invest your money in bonds or stocks, an important metric that can show you the right path is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. This ratio comes in handy for finding out undervalued stocks. Also, this ratio is effective for comparing stocks with market or fixed income securities.
Earnings yield can be calculated as (annual earnings per share/market price) x 100. While comparing similar stocks, the one with high earnings yield should fetch higher returns.
This ratio is useful for comparing the performance of the market with the 10-year Treasury yield. When the yield of the market index is higher than the 10-year Treasury yield, stocks can be said to be undervalued in comparison to bonds. This means that investing in the stock market is a better option for a value investor.
However, while T-bills are devoid of risks, investing in stocks always carries some inherent risks. Hence, it will be prudent to add a risk premium to the Treasury yield while comparing with the earnings yield of a stock or the broader market.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/346399/4-high-earnings-yield-stocks-to-create-a-solid-portfolio
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