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Alberto Abaterusso
Alberto Abaterusso
Articles (2203) 

A Trio of High Earnings Return Stocks

Their return is more than double the spot rate of the 20-year high-quality market corporate bonds

April 08, 2020 | About:

In order to come across value opportunities, investors may want to consider stocks whose earnings returns have outperformed that of the 20-year high-quality market corporate bonds.

These bonds represent corporate loans that have been issued by triple-A, double-A and single-A rated companies, which have a high capacity to repay their loans. As a result, the U.S.-listed equities that represent these issuers of investment-grade bonds imply a very low investment risk for their shareholders.

Thus, investors may want to have a look at the following stocks, as their earnings returns have recently more than doubled the monthly spot rate that the 20-year high-quality market corporate bonds are granting to their possessors (3.35% as of April 7). These stocks also have price-earnings ratios of less than 14.93.

Fujitsu Ltd

Shares of Fujitsu Ltd (FJTSY) closed at a price of $18.26 per unit on Tuesday for a market capitalization of $18.28 billion.

The Japanese information and communication technology company grants an earnings return of 7.5% and a price-earnings ratio of 13.29.

The share price decreased by 2.6% so far this year, but Wall street sell-side analysts forecast that it will rebound, hitting a 26% upside from Tuesday’s level for a price target of $23.01 per share. Analysts also recommend an overweight rating for this stock.

GuruFocus assigned a very good rating of 7 out of 10 for the company's financial strength and a positive rating of 6 out of 10 for its profitability.

CAE Inc

Shares of CAE Inc (NYSE:CAE) closed at a price of $12.39 per unit on Tuesday for a market capitalization of $3.23 billion.

The Canadian provider of training solutions to civil aviation, defence, security and healthcare organizations worldwide grants an earnings return of 7.7% and a price-earnings ratio of 12.93.

The share price was 53.2% down so far this year. However, Wall Street sell-side analysts forecast that it will start to uptrend again up to a $20.25 price target, marking a 63.4% rise. Analysts also recommend an overweight rating for the shares of this stock.

GuruFocus assigned a moderate rating of 4 out of 10 for the company’s financial strength and a higher rating of 8 out of 10 for its profitability.

KBR Inc

Shares of KBR Inc (NYSE:KBR) closed at a price of $20.08 per unit on Tuesday for a market capitalization of $2.9 billion.

The Houston, Texas-based engineering and construction company grants an earnings yield of 7% and a price-earnings ratio of 14.24.

The share price has fallen by 34% so far this year, but Wall Street sell-side analysts forecast that it will bounce back, rising more than 50% to hit the price target of $30.60. Analysts also recommend an overweight rating for this stock.

GuruFocus assigned the stock a moderate rating of 5 out of 10 for its financial strength and a positive rating of 6 out of 10 for its profitability.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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