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4 Stocks With High Earnings Returns

Their earnings returns more the double the monthly spot rate on 20-year high-quality market corporate bonds

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Alberto Abaterusso
Sep 12, 2021

Summary

  • Commerce Bancshares, AutoNation, Penske Automotive Group and Woori Financial Group could be high-return investments.
  • Wall Street recommends these stocks.
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Picking stocks whose earnings returns are more than double the monthly spot rate of 20-year high-quality market corporate bonds provides more opportunities to discover high-return investments. The 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% as of the time of writing, the following four stocks could be of interest to investors, as their earnings returns are more than 6% at price-earnings ratios of less than 16.7.

Commerce Bancshares

Shares of Commerce Bancshares Inc. (

CBSH, Financial) were trading at $67.94 per unit at close on Friday for a market capitalization of about $7.94 billion.

The Kansas City, Missouri-based regional bank offers an earnings return of 6.9% and has a price-earnings ratio of 14.59.

The share price has risen 26% over the past year, determining a 52-week range of $50.50 to $83.06.

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GuruFocus assigned a score of 5 out of 10 for both the company's financial strength and profitability ratings.

Wall Street recommends a median rating of hold with an average target price of $71.43.

AutoNation

Shares of AutoNation Inc. (

AN, Financial) were trading at a price of $104.53 apiece at close on Friday for a market capitalization of $7.48 billion.

The Fort Lauderdale, Florida-based automotive retailer offers an earnings return of 10.96% and a price-earnings ratio of 9.12.

The stock has risen by 86.43% over the past year for a 52-week range of $50.52 to $125.21.

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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 recommends a median rating of hold with an average target price of $127.38.

Penske Automotive Group

Shares of Penske Automotive Group Inc. (

PAG, Financial) were trading at $89.45 per unit at close on Friday for a market capitalization of $7.19 billion.

Based in Bloomfield Hills, Michigan, the company operates 304 retail automotive franchises in the U.S. and overseas, 17 used vehicle dealerships in the U.S. and the United Kingdom and 25 commercial truck dealerships across North America. The stock offers an earnings return of 13.44% and has a price-earnings ratio of 7.44.

The stock has risen by 82.40% over the past year, determining a 52-week range of $45.58 to $93.45.

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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 recommends a median rating of buy with an average target price of $115.

Woori Financial Group

Shares of Woori Financial Group Inc. (

WF, Financial) were trading at $28.05 per unit at close on Friday for a market capitalization of $6.75 billion.

The South Korean regional bank with a network of 821 offices and 4,531 ATMs offers an earnings return of 25.4% and has a price-earnings ratio of 3.94.

The stock has increased by 28.67% over the past year, determining a 52-week range of $20.57 to $32.55.

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GuruFocus assigned a score of 2 out of 10 for both the company's financial strength rating and its profitability rating.

Wall Street recommends one rating of hold for the stock.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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