Looking for stocks with high earnings yields enhances the likelihood to uncover value opportunities.
A stock with an earnings yield exceeding 6.7% more than doubles the current monthly spot rate of 3.35% on the 20-year high-quality market corporate loan bonds. Thus, value investors may want to consider the following stocks, as their price-earnings ratios (which are the inverse of their earnings yields) are lower than 14.93.
EMCOR Group
Shares of EMCOR Group Inc (EME, Financial) traded at a price of $76.95 per unit at close on Friday for a market capitalization of $4.33 billion.
The Norwalk, Connecticut-based provider of electrical and mechanical construction and facilities services in the U.S. offers an earnings yield of 7.5% and a price-earnings ratio of 13.4.
The share price is up 76.1% over the past five years through March 6, but it is slightly below the Peter Lynch earnings line, suggesting that the stock is fairly valued.
GuruFocus assigned a positive rating of 7 out of 10 for the company's financial strength and a high rating of 8 out of 10 for its profitability.
The stock has a forward dividend yield of 0.42% as of Friday.
Wall Street issued an overweight recommendation rating for this stock with a price target average of $93.80.
Werner Enterprises
Shares of Werner Enterprises Inc (WERN, Financial) traded at a price of $33.23 per unit at close on Friday for a market capitalization of $2.30 billion.
The Omaha, Nebraska-based trucking transportation and logistics company grants an earnings yield of 7.2% and a price-earnings ratio of 13.9.
The share price has risen 8.5% over the past five years through March 6. The below chart shows that the share price currently trades below the Peter Lynch earnings line, indicating an affordable investment.
GuruFocus assigned a positive rating of 6 out of 10 for the company’s financial strength and a rating of 9 out of 10 for its profitability.
The stock gives a forward dividend yield of 1.08% as of Friday.
As of March, two sell-side analysts recommend a strong buy, one sell-side analyst recommends a buy, 13 sell-side analysts suggest a hold and two sell-side analysts suggest an underperforming rating. The average target price is $41.13 per share.
Oxford Industries
Shares of Oxford Industries Inc (OXM, Financial) traded at a price of $57.81 per unit at close on Friday for a market capitalization of $985.08 million.
The Atlanta, Georgia-based designer, manufacturer, marketer and worldwide distributor of apparel products offers an earnings yield of 7.2% and a price-earnings ratio of 13.96.
The share price has risen by 10.24% over the past five years through March 6. The stock price is still undervalued, as it trades below the Peter Lynch earnings line.
GuruFocus assigned the stock a positive rating of 6 out of 10 for its financial strength and a very good rating of 7 out of 10 for its profitability.
The stock has a 2.56% forward dividend yield as of Friday.
Wall Street recommends an overweight rating for this stock and has established an average target price of $81.67 per share.
Disclosure: I have no positions in any securities mentioned.
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