In order to unearth value opportunities, investors may find it helpful to look for stocks whose earnings returns have significantly outperformed the monthly sport rate (3.26% as of June 8) that the 20-year high-quality market corporate bonds offer to their holders. These investment-grade bonds have been issued by companies that have high credit ratings, implying an extremely low investment risk for both bondholders and shareholders.
Listed below are three stocks whose earnings returns have recently more than doubled the monthly spot rate of 3.26%. These stocks also have price-earnings ratios of less than 15.34.
Harley-Davidson Inc
Shares of Harley-Davidson Inc (HOG, Financial) traded at a price of $25.42 per unit at close on Friday for a market capitalization of $3.89 billion.
The Milwaukee, Wisconsin-based manufacturer of recreational motorcycles offers an earnings yield of 9.1% and has a price-earnings ratio of 10.96.
The share price has fallen 27.5% over the past year for a 52-week range of $14.31 to $41.40.
GuruFocus assigned a moderate rating of 4 out of 10 for the company's financial strength and a good rating of 7 out of 10 for its profitability.
The stock has a hold recommendation rating on Wall Street.
Allegiant Travel Co
Shares of Allegiant Travel Co (ALGT, Financial) traded at a price of $124.10 per unit at close on Friday for a market capitalization of $2.01 billion.
The Las Vegas-based provider of leisure travel services offers an earnings yield of 7% and has a price-earnings ratio of 14.31.
The share price has declined nearly 13% over the past year for a 52-week range of $60.06 to $183.26.
GuruFocus assigned a moderate rating of 4 out of 10 for the company’s financial strength and a high rating of 9 out of 10 for its profitability.
The stock has an overweight recommendation rating on Wall Street.
Builders FirstSource Inc
Shares of Builders FirstSource Inc (BLDR, Financial) traded at a price of $23.54 per unit at close on Friday for a market capitalization of $2.75 billion.
The Dallas-based manufacturer and supplier of building materials and services to U.S. homebuilders and consumers offers an earnings yield of 7.05% and has a price-earnings ratio of 14.18.
The share price has risen 58.2% over the past year for a 52-week range of $9 to $28.43.
GuruFocus assigned the stock a moderate rating of 4 out of 10 for its financial strength and a positive rating of 6 out of 10 for its profitability.
The stock has an overweight recommendation rating on Wall Street.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Stocks With Low Forward Price-Earnings Ratios
- 3 Stocks With Low Price-Sales Ratios
- A Trio of Stocks Growing Capex Fast
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