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Alberto Abaterusso
Alberto Abaterusso
Articles (1911) 

3 High-Earnings Return Stocks Set to Outperform

Their yields double the 20-year high-quality market corporate bonds' spot rate

January 10, 2020 | About:

Selecting stocks whose earnings yields double the monthly spot rate of 3.51% on 20-year high-quality market corporate bonds enhances the likelihood of finding value opportunities. The bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies. Most likely, these companies will rarely encounter financial problems that they can't solve.

The following securities offer earnings historical yields of more than 7% and trade their earnings for less than 14.25 times their price. Wall street sell-side analysts have also issued positive recommendation ratings for them.

TIM Participacoes S.A.

The first company under consideration is TIM Participacoes S.A. (NYSE:TSU).

Shares of the Brazilian telecommunication services company closed at $19.44 on Thursday, Jan. 9 for a market capitalization of $9.41 billion.

The stock has an earnings yield of 9% versus the industry median of 5.4% and a price-earnings ratio of 11.12 versus the industry median of 18.68.

The stock has fallen 11.23% over the past five years through Jan. 9. As a result, it is trading below its fair price based on the Peter Lynch chart.

GuruFocus assigned a rating of 7 out of 10 for both the company's financial strength and its profitability.

The stock grants a forward dividend yield of 1.62% as of Thursday. Wall Street recommends an overweight recommendation rating.

MVB Financial Corp

The second company under consideration is MVB Financial Corp. (NASDAQ:MVBF).

Shares of the Fairmont, West Virginia-based provider of banking and mortgage products and services closed at $23.05 on Thursday for a market capitalization of $272.55 million.

The stock has an earnings yield of nearly 9% versus the industry median of 8.3% and a price-earnings ratio of 11.35 versus the industry median of 12.07.

The stock price is up 54.4% over the past five years, reaching a market valuation that seems cheap based on the Peter Lynch chart.

MVB Financial Corp has received a rating of 2 out of 10 for its financial strength and a rating of 4 out of 10 for its profitability.

The stock grants a forward dividend yield of 1.2% as of Thursday and has received an overweight recommendation rating from Wall Street sell-side analysts.

SB Financial Group

The third company under consideration is SB Financial Group Inc (NASDAQ:SBFG).

Shares of the Defiance, Ohio-based provider of commercial banking and wealth management services closed at $19.05 on Thursday with a market capitalization of $121.85 million.

The stock has an earnings yield of 7.7%, which is a little bit below the industry median of 8.3%. The price-earnings ratio of 13.05 is slightly higher than the industry median of 12.07.

The stock price has grown 101.2% in the past five years through Jan. 9. Nevertheless, it appears fairly-priced according to the following Peter Lynch chart.

GuruFocus assigned the company a rating of 4 out of 10 for both financial strength and profitability.

The stock offers a forward dividend yield of 1.99% as of Thursday. Wall Street issued a buy recommendation rating for its shares.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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