Selecting stocks whose earnings returns are more than double the monthly spot rate of the 20-year high-quality market corporate bonds increases the probability to discover 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 3.23% as of the writing of this article, the following three stocks could be of interest to investors, as their earnings returns are more than 6.5% at price-earnings ratios of less than 15.5.
Knight-Swift Transportation Holdings Inc
Shares of Knight-Swift Transportation Holdings Inc (KNX, Financial) were trading at $49.43 per unit at close on Wednesday for a market capitalization of about $8.2 billion.
The Phoenix, Arizona-based provider of truckload transportation services in North America and Mexico offers an earnings return of 6.6% and has a price-earnings ratio of 15.23.
The share price has risen 16.75% over the past year, determining a 52-week range of $37.07 to $51.17.
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 with an average target price of about $59.50 per share for this stock.
Western Midstream Partners LP
Shares of Western Midstream Partners LP (WES, Financial) were trading at a price of $19.11 apiece at close on Wednesday for a market capitalization of $7.89 billion.
The Woodlands, Texas-based natural gas and crude oil midstream operator in the United States offers an earnings return of 11.52% and a price-earnings ratio of 8.68.
The stock has risen by 96.20% over the past year for a 52-week range of $6.99 to $23.69.
GuruFocus assigned a rating of 3 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 buy with an average target price of $24.50 per share for this stock.
Polaris Inc
Shares of Polaris Inc (PII, Financial) were trading at $133.23 per unit at close on Wednesday for a market capitalization of $8.07 billion.
The Medina, Minnesota-based manufacturer and marketer of power sports vehicles worldwide offers an earnings return of 7.8% and has a price-earnings ratio of 12.76.
The stock has increased by 28.3% over the past year, determining a 52-week range of $86.67 to $147.73.
GuruFocus assigned a rating of 5 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 with an average target price of $153.57 per share for this stock.
Disclosure: I have no positions in any securities mentioned.
