>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Alberto Abaterusso
Alberto Abaterusso
Articles (2618) 

A Trio of Non-Cyclical Stocks to Consider

Their earnings yields are outperforming the S&P 500

November 15, 2020 | About:

Investors focused on assets with high returns might be interested in the following non-cyclical stocks, as their earnings yields (as calculated through Joel Greenblatt's method) are outperforming the S&P 500 Index.

Greenblatt defines the earnings yield a little differently, calculating the ratio as the company's earnings before interest and taxes divided by its enterprise value. The ratio offers a more reliable reference when applied to non-cyclical stocks whose earnings have little or no correlation with the business cycle (as the metric only looks at 12 months of operating activities).

The S&P 500's historical high earnings yield stands at around 9.5%.

Biogen

The first stock to consider is Biogen Inc. (NASDAQ:BIIB), a Cambridge, Massachusetts-based drug manufacturer.

The stock offers an earnings yield of 15.63% as of the most recent quarter, resulting from a 12-month EBIT of about $6.64 billion and an enterprise value of $42.49 billion.This stands slightly below the upper limit of the past 10-year historical earnings yield range of 3. 3% to 16.5%. Biogen's earnings yield ranks higher than 94% of 1,057 companies that are operating in the drug manufacturers industry.

The stock traded at around $248.59 per share at close on Friday for a market capitalization of $38.25 billion and a 52-week range of $223.25 to $374.99. The stock lost nearly 12% over the past year.

Its price-earnings ratio is 8.23 (versus the industry median of 24.37), the price-book ratio is 3.56 (versus the industry median of 2.23) and the price-sales ratio is 2.91 (versus the industry median of 2.66).

Biogen does not pay dividends.

GuruFocus assigned a score of 6 out of 10 for the company's financial strength rating and a 10 out of 10 rating for its profitability.

Wall Street sell-side analysts issued eight strong buy recommendation ratings, 13 buy recommendation ratings and 11 hold recommendation ratings for an average target price of $290.20 per share.

PRIMECAP Management, BlackRock Inc. and Vanguard Group Inc. are the three largest fund holders of the company, owning 10.2%, 9.22% and 8.13% of shares outstanding.

Albertsons Companies

The second stock to consider is Albertsons Companies Inc. (NYSE:ACI), a Boise, Idaho-based operator of grocery stores in the United States.

The stock had an earnings yield of approximately 10.6% as of the most recent quarter as a result of a 12-month EBIT of about $2.07 billion and an enterprise value of $19.53 billion. Albertsons Companies' current earnings yield stands above the upper limit of the 10-year historical range of 9% to 9.91% and ranks higher than 83% of 288 companies that are operating in the retail - defensive industry.

The share price was trading at around $15.15 at close on Friday for a market capitalization of $7.16 billion and a 52-week range of $12.91 to $16.5. The stock lost 2% over the past year.

Its price-earnings ratio is 7.83 (versus the industry median of 19.29), the price-book ratio is 4.83 (versus the industry median of 1.79) and the price-sales ratio is 0.12 (versus the industry median of 0.43).

On Nov. 10, the company paid a quarterly cash dividend of 10 cents per common share for an estimate of forward dividend yield of 2.62% as of Nov. 13.

GuruFocus assigned a 5 out of 10 rating for both the company's financial strength and profitability.

Wall Street sell-side analysts issued five strong buy recommendation ratings, 10 buy recommendation ratings and four hold recommendation ratings for the stock and have set an average target price of $20.47 per share.

Steven Cohen and Paul Tudor Jones are the two top fund holders of the company, owning 0.16% and 0.06% of shares outstanding.

Cia Paranaense De Energia Copel

The third stock to consider is Cia Paranaense De Energia Copel (NYSE:ELP), a Brazilian distributor of electricity.

The stock had an earnings yield of 20.2% as of the most recent quarter, resulting from a 12-month EBIT of about $1.03 billion and an enterprise value of $4.84 billion. Currently, Cia Paranaense De Energia Copel's earnings yield stands very close to the upper limit of the 10-year historical range of 5.2% to 21.5% and ranks higher than 92% of 507 companies that are operating in the utilities - regulated industry.

The shares closed at $12.49 on Friday for a market capitalization of $3.42 billion and a 52-week range of $8.28 to $18.15. The stock declined 12.8% over the past year.

Its price-earnings ratio is 5.41 (versus the industry median of 16.96), the price-book ratio is 0.91 (versus the industry median of 1.46) and the price-sales ratio is 1.01 (versus the industry median of 1.4).

The company has been a dividend payer for many years. In 2019, it declared dividends for a total amount of approximately 44.5 cents per common share, producing a trailing 12-month dividend yield of 3.57% as of Nov. 13.

GuruFocus assigned a score of 5 out of 10 to the company's financial strength and a 7 out of 10 rating to its profitability.

Wall Street sell-side analysts issued one buy recommendation rating and one hold recommendation rating for the stock and have established an average target price of $13.60 per share.

Amid the top fund holders of the company, BlackRock Inc. dominates with 1.56% of shares outstanding, followed by Letko, Brosseau & Associates Inc. with 1.02% and Vanguard with 0.65%.

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.

About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. 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

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Alberto Abaterusso


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)