For Immediate Release
Chicago, IL – September 6, 2019 - Stocks in this week’s article are Guess? (GES - Free Report) , Lithia Motors (LAD - Free Report) , Meritage Homes Corp. (MTH - Free Report) and Commercial Metals Co. (CMC - Free Report) .
4 High Earnings Yield Stocks to Power Your Portfolio
If you are not sure whether to invest your money in bonds or stocks, a key parameter that can show you the right direction is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. This ratio is effective for determining undervalued stocks. Also, this ratio is useful for comparing stocks with the 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 effective 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 implies that investing in the stock market is a better option for a value investor.
However, while T-bills are free from risks, investing in stocks always carries some inherent risks. Hence, it will be wise 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/503278/4-high-earnings-yield-stocks-to-power-your-portfolio
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