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Alberto Abaterusso
Alberto Abaterusso
Articles (2604) 

3 High Earnings Return Stocks

They are doubling the monthly spot rate on 20-year high-quality market corporate bonds

March 04, 2021 | About:

Choosing stocks whose earnings return is more than double the monthly spot rate of the 20-year high-quality market corporate bonds attributes a higher probability to unearth high-return investments, in my opinion. These investment-grade bonds represent corporate loans issued by triple-A, double-A and single-A rated companies.

Since these bonds are granting a monthly spot rate of 2.99% as of the writing of this article, the following three stocks could attract the attention of investors, as their earnings returns are yielding more than 5.98% at price-earnings ratios of less than 16.72.

Berkshire Hathaway Inc. Class A

Berkshire Hathaway Inc Class A shares (NYSE:BRK.A) were trading at $381,680 each at close on Wednesday for a market capitalization of $580.66 billion.

The Omaha, Nebraska-based international conglomerate holding company grants an earnings return of 7.12% and has a price-earnings ratio of 14.05.

The share price has risen by 21.17% over the past year, determining a 52-week range of $239,440 to $385,000.

GuruFocus assigned a rating of 5 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 median rating of hold with an average target price of approximately $485,757 per share for this stock.

Rio Tinto PLC

Shares of Rio Tinto PLC (NYSE:RIO) were trading at a price of $90.86 each at close on Wednesday for a market capitalization of $145.36 billion.

The Australian multinational metals and mining corporation grants an earnings return of 7.11% and has a price-earnings ratio of 14.07.

The stock has risen by 84.41% over the past year, determining a 52-week range of $35.35 to $92.85.

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

Wall Street sell-side analysts recommend a median rating of overweight and have established an average target price of $102.33 per share for this stock.

Morgan Stanley

Shares of Morgan Stanley (NYSE:MS) were trading at $82.06 each at close on Wednesday for a market capitalization of $154.31 billion.

The New York-based investment bank major grants an earnings return of 7.85% and has a price-earnings ratio of 12.74.

The stock has risen by 92.67% over the past year for a 52-week range of $27.20 to $82.94.

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 a median rating of overweight with an average target price of $84.40 per share for this stock.

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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