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Alberto Abaterusso
Alberto Abaterusso
Articles (2614) 

3 High Earnings Return Stock Picks for the Value Investor

They are outperforming investment-grade bonds

December 15, 2020 | About:

Selecting securities whose earnings return is more than double the monthly spot rate of the 20-year high-quality market corporate bonds grants a higher likelihood to unearth high-return investments, in my opinion. This class of investment-grade bonds represents corporate loans issued by triple-A, double-A and single-A rated companies.

Since these bonds grant a monthly spot rate of 2.92% as of November 2020, the following three stocks may be of interest to investors, as they are granting earnings returns of more than 5.84% at price-earnings ratios of less than 17.12.

BHP Group PLC

Shares of BHP Group PLC (NYSE:BBL) were trading at $51.74 per unit at close on Monday for a market capitalization of about $133.03 billion.

The Australian explorer, developer and producer of oil and gas and miner of base and precious metals grants an earnings return of 6.24% and has a price-earnings (PE) without non-recurring items (NRI) ratio of 16.02.

The share price has risen by 8.97% over the past year for a 52-week range of $23.64 to $52.97.

GuruFocus assigned a rating of 6 out of 10 for the company's financial strength and of 8 out of 10 for its profitability.

Wall Street sell-side analysts recommend an overweight rating for this stock and have set an average target price of $38.59 per share.

PT Telekomunikasi Indonesia (Persero) Tbk

Shares of PT Telekomunikasi Indonesia (Persero) Tbk (NYSE:TLK) traded at a price of $23.06 each at close on Monday for a market capitalization of about $22.84 billion.

The Indonesian global provider of telecommunication services gives an earnings return of 5.90% and has a PE without NRI ratio of 16.94.

The stock has declined by 18.11% over the past year, determining a 52-week range of $16.06 to $29.37.

GuruFocus assigned a rating of 5 out of 10 to the company's financial strength and of 9 out of 10 to its profitability.

Wall Street sell-side analysts recommend a buy rating for this stock and have produced an average target price of $27.46 per share.

KB Financial Group Inc

Shares of KB Financial Group Inc (NYSE:KB) were trading at $42.46 per unit at close on Monday for a market capitalization of $16.76 billion.

The South Korean bank providing various banking and other financial services to individuals and businesses in South Korea and internationally grants an earnings return of 18.62% and has a PE without NRI ratio of 5.37.

The stock has risen 1.43% over the past year, determining a 52-week range of $20.93 to $43.95.

GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and of 5 out of 10 to its profitability.

Wall Street sell-side analysts recommend a buy rating for this stock and have established an average target price of $48.37 per share.

Disclosure: I have no positions in any securities mentioned.

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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

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