If you select stocks that more than double the earnings yield that 20-year high-quality corporate bonds are granting to their holders, you could increase your chances to unearth value opportunities, in my opinion. These bonds, which entail a very low risk of bankruptcy as they represent corporate loans issued by investment-grade companies, are currently yielding a 2.84% monthly return to their holders.
Thus, investors may be interested in the following stocks, as they offer earnings yields of more than 5.7% and have price-earnings ratios below 17.6.
American Equity Investment Life Holding Co
Shares of American Equity Investment Life Holding Co AEL were trading at $31.68 per unit at close on Thursday for a market capitalization of $2.91 billion.
The West Des Moines, Iowa-based provider of life insurance products and services to individuals in the United States offers an earnings yield of 8.3% and has a price-earnings (PE) ratio without non-recurring items (NRI) of 12.09.
The share price has risen nearly 43% over the past year, determining a 52-week range of $9.07 to $34.25.
GuruFocus assigned a positive rating of 5 out of 10 for both the company's financial strength and its profitability.
Wall Street sell-side analysts recommend a hold rating with an average target price of $28.29 per share for this stock.
PulteGroup Inc
Shares of PulteGroup Inc PHM was trading at a price of $47.46 each at close on Thursday for a market capitalization of $12.73 billion.
The Atlanta, Georgia-based home builder offers an earnings yield of 8.9% and has a PE without NRI ratio of 11.19.
The stock has risen by 31.2% over the past year, determining a 52-week range of $17.12 to $48.
GuruFocus assigned a very good rating of 7 out of 10 to the company's financial strength and a high rating of 8 out of 10 to its profitability.
Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $49.15 per share.
LPL Financial Holdings Inc
Shares of LPL Financial Holdings Inc LPLA were trading at $76.65 per unit at close on Thursday for a market capitalization of $6.06 billion.
The San Diego, California-based provider of brokerage and investment advisory services to U.S. financial institutions offers an earnings yield of 8.2% and has a PE without NRI ratio of 12.19.
The stock has risen by 6.3% over the past year for a 52-week range of $32.01 to $99.60.
GuruFocus assigned a low rating of 3 out of 10 to the company's financial strength and a moderate rating of 4 out of 10 to its profitability.
Wall Street sell-side analysts recommend an overweight rating with an average target price of $95.50 per share for this stock.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 Low Forward Price-Earnings Ratio Stocks
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