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3 Stocks With High Forward Rates of Return

Value investors could be interested in these businesses

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Apr 01, 2022
Summary
  • Apple, Nvidia and Micron Technology generate more than twice the yield of 20-year high-quality market corporate bonds.
  • Yacktman's forward rate of return is calculated as normalized free cash flow yield plus real growth plus inflation.
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Donald Yacktman, a well-known value investor and founder of

Yacktman Asset Management (Trades, Portfolio), took the forward rate of return into account when he evaluated the attractiveness of a stock. This valuation ratio is calculated as normalized free cash flow yield plus real growth plus inflation.

Value investors could be interested in the following U.S.-listed equities as their forward rates of return more than double the return on 20-year high-quality market corporate bonds, which is 3.70% as of the time of writing.

Apple

The first stock that could be of interest is Apple (

AAPL, Financial), a Cupertino, California-based manufacturer of smartphones, personal computers, tablets, wearables and accessories worldwide.

Apple’s forward rate of return is 17.43%, which ranks higher than 74% of 1,511 companies that operate in the hardware industry.

The share price has increased by 3.93% over the past year to close at $174.61 on Thursday for a market cap of $2.81 trillion. The 52-week range is $122.25 to $182.94. Its price-earnings ratio is 28.52 and its price-book ratio is 39.10.

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Vanguard Group Inc. and BlackRock Inc. are among the largest fund holders of the company with 7.73% and 6.25% of shares outstanding. The large asset management firms are followed by

Warren Buffett (Trades, Portfolio), who owns a 5.44% stake.

Nvidia

The second stock that could appeal to value investors is Nvidia Corp. (

NVDA, Financial), a Santa Clara, California-based producer of graphics processing units and system on chip units for consumer electronics, computer hardware, semiconductors and video games industries.

Nvidia’s forward rate of return is 20.74%, which ranks higher than 80% of the 504 companies that operate in the semiconductors industry.

The share price has risen by 92.85% over the past year to trade at $272.86 at close on Thursday for a market cap of $665.43 billion and a 52-week range of $134.59 to $346.47. Its price-earnings ratio is 68.89 and its price-book ratio is 24.97.

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Vanguard Group and BlackRock are among the largest shareholders of the company with 7.84% and 7.11% of shares outstanding. The Parnassus Core Equity Fund follows with 6.94% of shares outstanding.

Micron Technology

The third stock that could be of interest is Micron Technology Inc. (

MU, Financial), a Boise, Idaho-based semiconductor manufacturer.

Micron Technology’s forward rate of return is 8.01%, which ranks higher than 54% of the 504 companies that operate in the semiconductors industry.

The share price was down 19.45% year over year, trading at $77.89 at Thursday's close, giving it a market cap of $83.49 billion and a 52-week range of $65.67 to $98.45. Its price-earnings ratio is 9.41 and its price-book ratio is 1.74.

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Parnassus Core Equity Fund, Vanguard Group and BlackRock are among the largest fund holders of the company with 20.59%, 7.99% and 7.54% of shares outstanding.

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Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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