If you pick stocks that more than double the earnings yield that 20-year high-quality corporate bonds are offering to their holders, you could increase your likelihood to unearth value opportunities, in my opinion. These bonds, which imply a very low risk of bankruptcy as they represent corporate loans issued by triple-A, double-A and single A-rated companies, are currently yielding a monthly return of 3.05% to their holders.
Thus, investors may want to consider the following stocks, as they offer earnings returns of more than 6.1% and have price-earnings ratios below 16.4.
Murphy USA Inc
Shares of Murphy USA Inc MUSA were trading at $133.71 per unit at close on Tuesday for a market capitalization of $3.82 billion.
The El Dorado, Arkansas-based operator of nearly 1,500 gasoline stores in the Midwest, Southeast and Southwest United States offers an earnings return of 9.3% and has a price-earnings (PE) ratio without non-recurring items (NRI) of 10.73.
The share price has risen 12% over the past year, determining a 52-week range of $78.75 to $144.09.
GuruFocus assigned a rating of 6 out of 10 for the company's financial strength and a rating of 7 out of 10 for its profitability.
Wall Street sell-side analysts recommend a hold rating with an average target price of $145 per share for this stock.
The One Group Hospitality Inc
Shares of The One Group Hospitality Inc STKS was trading at a price of $3.01 per unit at close on Tuesday for a market capitalization of $87.50 million.
The Denver, Colorado-based operator of 55 venues in North America, Europe and the Middle East region offers an earnings return of 12.3% and has a PE without NRI ratio of 8.14.
The stock has fallen by 7.7% over the past year, determining a 52-week range of $0.73 to $4.68.
GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and a rating of 5 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 $3.50 per share.
Steelcase Inc
Shares of Steelcase Inc SCS were trading at $12.76 per unit at close on Tuesday for a market capitalization of $1.46 billion.
The Grand Rapids, Michigan-based manufacturer and seller of business equipment and supplies in North America and internationally offers an earnings return of 9% and has a PE without NRI ratio of 11.1.
The stock has fallen by 30.1% over the past year for a 52-week range of $7.02 to $23.02.
GuruFocus assigned a rating of 6 out of 10 to the company's financial strength and a rating of 7 out of 10 to its profitability.
Wall Street sell-side analysts recommend an overweight rating with an average target price of $15 per share for this stock.
Disclosure: I have no positions in any securities mentioned.
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