Investors may want to consider the three non-cyclical stocks listed below, as their earnings yields (as calculated via Joel Greenblatt (Trades, Portfolio)'s method) are doubling the 20-year high quality market corporate bond spot rate of 3.23% as of the writing of this article.
Greenblatt calculates the earnings yield as the company's earnings before interest and tax (Ebit) divided by its enterprise value. This ratio represents a more reliable reference for the appraisal of non-cyclical stocks, whose earnings have little or no correlation with the business cycle (as the metric only looks at 12 months of operating activities).
Energy Company of Minas Gerais
The first stock investors may want to consider is Energy Company of Minas Gerais (CIG, Financial), a generator and distributor of electricity in Brazil.
The stock grants an earnings yield of 7.94% as of the March 2021 quarter. This stands below the median point of the past 10-year historical earnings yield range of 4.93% to 40.38%. However, Energy Company of Minas Gerais' earnings yield ranks higher than 63.1% of 528 companies that are operating in the utilities-regulated industry.
The share price was trading at around $2.31 at close on Monday for a market capitalization of $3.91 billion and a 52-week range of $1.59 to $2.74. The stock has risen 9.9% over the past year.
Its price-earnings ratio is 17.89 and the price-book ratio is 1.41.
Currently, Energy Company of Minas Gerais pays quarterly dividends leading to a trailing 12-month and forward dividend yield of 9.17% as of July 26.
On Wall Street, as of July, the stock has a median recommendation rating of overweight with an average target price of about $2.78 per share.
BlackRock Inc. dominates in the group of top fund holders of the company with 7.32% of shares outstanding. It is followed by Polunin Capital Partners Ltd with 0.73% of shares outstanding and Arrowstreet Capital Limited Partnership with 0.39% of shares outstanding.
Sprouts Farmers Market Inc
The second stock investors may want to consider is Sprouts Farmers Market Inc (SFM, Financial), a Phoenix, Arizona-based operator of health-focused grocery stores in the United States.
The company grants an earnings yield of 9.15% as of the March 2021 quarter. This stands significantly above the median point of the 10-year historical range of 1.57% to 10.88% and ranks higher than 74% of the 299 companies that are operating in the retail defensive industry.
The share price was trading at around $24.60 at close on Monday for a market capitalization of $2.90 billion and a 52-week range of $18.21 to $29.35. The stock has fallen by 9% over the past year.
Its price-earnings ratio is 10.41 and the price-book ratio is 3.01.
Currently, Sprouts Farmers Market Inc does not pay dividends.
On Wall Street, as of July, the stock has a median recommendation rating of hold with an average target price of $27.50 per share.
BlackRock Inc. is the leader amid the top fund holders of the company with 11.60% of shares outstanding, followed by Vanguard Group Inc with 11.01% of shares outstanding and Jim Simons (Trades, Portfolio) with 4.65% of shares outstanding.
Hologic Inc
The third stock investors may want to consider is Hologic Inc (HOLX, Financial), a Marlborough, Massachusetts-based developer and supplier of medical systems and medical products for women's health in the U.S. and internationally.
The company grants an earnings yield of 12.33% as of the March 2021 quarter, standing well above the median point of the 10-year historical range of -9.62% to 14.05%, and ranking higher than 92% of 749 companies that are operating in the medical devices and instruments industry.
The share price was trading at $71.53 at close on Monday for a market capitalization of $18.33 billion and a 52-week range of $56.81 to $85. The stock has risen by 15.19% over the past year.
Its price-earnings ratio is 9.81 and the price-book ratio is 4.83.
Currently, Hologic Inc does not pay dividends.
On Wall Street, as of July, the stock has a median recommendation rating of buy with an average target price of $83.18 per share.
Among the top fund holders of the company, Price T Rowe Associates Inc/Md is the leader with 15.06% of shares outstanding. It is followed by Vanguard Group Inc holding 11% and FMR LLC with 10.81%.
Disclosure: I have no position in any security mentioned.
