Choosing stocks that more than doubled the earnings return that 20-year high-quality corporate bonds are granting to their holders could help unearth value opportunities. Holders of these bonds, which represent corporate loans issued by triple-A, double-A and single-A companies, currently receive a 3.50% monthly return.
The following stocks grant earnings returns of more than 7% and have price-earnings ratios of less than 14.3.
Universal Health Services Inc
Shares of Universal Health Services Inc (UHS, Financial) traded at a price of $101.67 per unit at close on Thursday for a market capitalization of $8.7 billion.
The King of Prussia, Pennsylvania-based owner and operator of medical care facilities grants an earnings yield of nearly 9% and has a price-earnings ratio of 11.15.
The share price has dropped by 29% so far this year, but Wall street sell-side analysts forecast that it will bounce back, hitting a 37% upside from Thursday’s level with a price target stands of $139.44 per share.
GuruFocus assigned a positive rating of 5 out of 10 for the company's financial strength and the near the top rating of 9 out of 10 for its profitability.
Woodward Inc
Shares of Woodward Inc (WWD, Financial) traded at a price of $53.62 per unit at close on Thursday for a market capitalization of $3.34 billion.
The Fort Collins, Colorado-based provider of control solutions for the global aerospace and industrial markets grants an earnings yield of 7.6% and has a price-earnings ratio of 13.15.
The share price fell by 55% so far this year, but Wall Street sell-side analysts predict that it will rebound up to a $63.33 price target, which will reflect a nearly 20% upside from current share price levels.
GuruFocus assigned a positive rating of 5 out of 10 for the company’s financial strength and a high rating of 8 out of 10 for its profitability.
Cosan Ltd
Shares of Cosan Ltd (CZZ, Financial) traded at a price of $12.10 per unit at close on Thursday for a market capitalization of $2.7 billion.
The Brazilian producer of bioethanol and sugar and distributor of fuel and natural gas grants an earnings yield of 11.4% and a price-earnings ratio of 8.76.
The share price declined by 47% so far this year. However, Wall Street sell-side analysts forecast that it will rebound strongly, rising about 35% within a year to the established price target of $16.60.
GuruFocus assigned the stock a moderate rating of 4 out of 10 for its financial strength and a high rating of 8 out of 10 for its profitability.
Disclosure: I have no positions in any securities mentioned.
Read more here:
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
