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Alberto Abaterusso
Alberto Abaterusso
Articles (2277) 

A Trio of High Earnings Yield Stocks

Their earnings yields beat the monthly spot rate of the 20-year high quality market corporate bonds

April 17, 2020 | About:

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 (NYSE:UHS) 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 (NASDAQ:WWD) 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 (NYSE:CZZ) 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.

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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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