Selecting stocks whose earnings return is more than twice the monthly spot rate of the 20-year high-quality market corporate bonds assigns a higher likelihood 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 offering a monthly spot rate of 3.20% as of the writing of this article, the following three stocks may attract investors, as their earnings returns are yielding more than 6.4% at price-earnings ratios of less than 15.63.
Sony Corp
Shares of Sony Corp (SNE, Financial) were trading at $106.86 each at close on Thursday for a market capitalization of $132.34 billion.
The Tokyo, Japan-based global consumer electronics company offers an earnings return of 7.43% and has a price-earnings ratio of 13.45.
The share price has risen 84.43% over the past year, determining a 52-week range of $56.77 to $118.50.
GuruFocus assigned a rating of 6 out of 10 for the company's financial strength and a rating of 5 out of 10 for its profitability.
Wall Street sell-side analysts recommend a median rating of overweight with an average target price of approximately $130.83 per share for this stock.
Sanofi SA
Shares of Sanofi SA (SNY, Financial) were trading at a price of $49.36 each at close on Thursday for a market capitalization of $123.29 billion.
The French drug manufacturer offers an earnings return of 11.64% and a price-earnings ratio of 8.59.
The stock has increased by 10.10%% over the past year, determining a 52-week range of $42.80 to $55.
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 overweight and have established an average target price of $60.11 per share for this stock.
UBS Group AG
Shares of UBS Group AG (UBS, Financial) were trading at $15.85 each at close on Thursday for a market capitalization of $53.95 billion.
The Swiss diversified bank offers an earnings return of 11.01% and has a price-earnings ratio of 9.08.
The stock has grown 79.30% over the past year for a 52-week range of $8.67 to $16.31.
GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and a rating of 4 out of 10 to its profitability.
Wall Street sell-side analysts recommend a median rating of overweight with an average target price of $16.76 per share for this stock.
Disclosure: I have no positions in any securities mentioned.
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