Choosing stocks whose earnings yield is more than double the monthly spot rate of the 20-year high-quality market corporate bonds enhances the likelihood to unearth high-return investments, in my opinion. This category of investment-grade bonds represents corporate loans issued by triple-A, double-A and single-A rated companies.
Since the monthly spot rate of the bonds stands at 2.83% as of July 2020, the following three stocks may hold value, as they offer earnings yields of more than 5.7% at price-earnings ratios of less than 17.7.
General Electric Co
Shares of General Electric Co (GE, Financial) were trading at $6.15 per unit at close on Monday for a market capitalization of $53.83 billion.
The Boston, Massachusetts-based multinational high technology industrial company offers an earnings yield of 6% and has a price-earnings (PE) without non-recurring items (NRI) ratio of 16.62.
The share price has fallen by 34.4% over the past year for a 52-week range of $5.48 to $13.26.
GuruFocus assigned a moderate rating of 4 out of 10 for the company's financial strength and a positive rating of 5 out of 10 for its profitability.
Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $8.18 per share.
BrightSphere Investment Group Inc
Shares of BrightSphere Investment Group Inc (BSIG, Financial) traded at a price of $13.31 per unit at close on Monday for a market capitalization of $1.07 billion.
The Boston, Massachusetts-based asset management company, serving its clients through separate specifically dedicated portfolios or equity mutual funds, offers an earnings yield of 16.7% and has a PE without NRI ratio of 6.
The stock has risen by 26.3% over the past year, determining a 52-week range of $3.61 to $14.61.
GuruFocus assigned a moderate rating of 4 out of 10 to the company's financial strength and a positive rating of 6 out of 10 to its profitability.
Wall Street sell-side analysts recommend an overweight rating for this stock and have produced an average target price of $16.50 per share.
GAMCO Investors Inc
Shares of GAMCO Investors Inc (GBL, Financial) were trading at $13.16 each at close on Monday for a market capitalization of $363.09 million.
The Rye, New York-based investment and asset management company, providing its clients with a broad range of financial services, offers an earnings yield of 17.1% and has a PE without NRI ratio of 5.85.
The stock has fallen 34.4% over the past year, determining a 52-week range of $9.03 to $20.31.
GuruFocus assigned a very good rating of 7 out of 10 to both the company's financial strength and its profitability.
Wall Street sell-side analysts recommend a buy rating for this stock.
Disclosure: I have no positions in any securities mentioned.
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