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Alberto Abaterusso
Alberto Abaterusso
Articles (2604) 

3 High-Return Stock Picks

Their forward rates of return are more than twice the 20-year high quality market corporate bonds

February 24, 2021 | About:

Donald Yacktman, a prominent value investor and founder of the AMG Yacktman Fund (Trades, Portfolio) Class I (YACKX), takes the "forward rate of return" highly into consideration when assessing the attractiveness of a stock. He calculates this valuation ratio as "normalized free cash flow yield plus real growth plus inflation."

The following U.S.-listed equities may draw the attention of value investors, as their forward rates of return are more than twice the return on 20-year high-quality market (HQM) corporate bonds, which stands at 2.99% as of the writing of this article.

Oshkosh Corp

The first stock value investors could be interested in is Oshkosh Corp (NYSE:OSK), an Oshkosh, Wisconsin-based designer, builder and seller of specialty vehicles and vehicle bodies.

Oshkosh's forward rate of return is 19.64%, which ranks higher than 80% of 143 companies that operate in the farm and heavy construction machinery industry.

Oshkosh's share price added nearly 43% over the past year to close at $109.62 on Tuesday for a market cap of $7.50 billion. The 52-week range is $46.72 to $119.75. Its price-earnings ratio is 23.68 and its price-book ratio is 2.57.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $112.19 per share.

BlackRock Inc. is the largest fund holder of the company, holding 9.55% of shares outstanding. The asset management company is followed by Vanguard Group Inc with 9.05% of shares outstanding and FMR LLC with 6.38% of shares outstanding.

Trinet Group Inc

The second stock value investors could consider is Trinet Group Inc (NYSE:TNET), a Dublin, California-based provider of staffing and employment services to small and midsize companies in North America.

Trinet Group Inc's forward rate of return is 25.38%, which ranks higher than 89% of 640 companies that operate in the business services industry.

Trinet Group Inc's share price increased by 49.64% over the past year to trade at $83.83 at close on Tuesday for a market cap of $5.53 billion and a 52-week range of $27.79 to $85.36. Its price-earnings ratio is 21.06 and its price-book ratio is 8.98.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $88.50 per share.

Amid the top fund holders of the company, Atairos Group, Inc. is the leader with 32.19% of shares outstanding. It is followed by Wellington Management Group LLP with 8.93% of shares outstanding and Vanguard Group Inc with 6.28% of shares outstanding.

Graphic Packaging Holding Co

The third stock value investors may want to consider is Graphic Packaging Holding Co (NYSE:GPK), an Atlanta, Georgia-based provider of packaging and containers solutions primarily for the food and beverage industry.

Graphic Packaging Holding Co's forward rate of return is 7.12%, which ranks higher than 46% of 267 companies that operate in the packaging and containers industry.

Graphic Packaging Holding Co's share price has gained 17.62% over the past year to trade at around $16.02 at close on Tuesday for a market cap of $4.29 billion and a 52-week range of $10.41 to $18.22. Its price-earnings ratio is 25.84 and its price-book ratio is 3.04.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $19.20 per share.

With 8.87% of shares outstanding, Vanguard Group Inc is the leader among the top fund holders of the company. It is followed by Fuller & Thaler Asset Management, Inc. with 5.16% of shares outstanding and BlackRock Inc. with 5.07% of shares outstanding.

Disclosure: I have no position in any security 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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