I often screen for companies that are outperforming 20-year high-quality market corporate bonds in terms of a higher earnings yield. Such research increases the chances of discovering a value stock. These bonds are securities representing the corporate loan issued by companies that are triple-A, double-A and single-A rated.
The most recent monthly observation on the spot rate of the 20-year bond is indicating a 4.57% yield. Here are the results of my screen.
Federal Home Loan Mortgage Corp. (FMCC, Financial) has an earnings yield of 43.7%. The McLean, Virginia-based financial services company is active in the secondary market for mortgages. Shares of Federal Home Loan Mortgage Corp. were trading around $2.57 on Friday. The market capitalization is $1.67 billion. The stock has increased 52% for the 52 weeks through Feb. 15. The share price at close Friday was 162.2% above the 52-week low 98 cents and 19.1% from the 52-week high of $3.06. The stock has a price-sales ratio of 0.53 versus an industry median of 3.41.
According to the Peter Lynch chart, the stock appears to trade cheaply.
Federal Home Loan Mortgage Corp has a GuruFocus financial strength rating of 3 out of 10 and profitability and growth rating of 2 out of 10.
YRC Worldwide Inc. (YRCW, Financial) was trading around $7.28 on Friday for a market capitalization of $246.42 million. The Overland Park, Kansas-based transportation company has an earnings yield of 9.9%. The share price declined 26% over the past year through Feb.15. The price-sales ratio is 0.05 versus an industry median of 1.03. The share price at close Friday falls in the 52-week range of $2.41 to $11.76.
The stock seems to be priced fairly, according to below chart of Peter Lynch.
The stock has a recommendation rating of 2.7 out of 5 and an average target price of $8.40 per share.
GuruFocus has assigned a financial strength rating of 5 out of 10 and a profitability and growth rating of 5 out of 10.
Social Reality Inc. (SRAX, Financial) was trading around $3.93 on Friday with a market capitalization of approximately $39.82 million. The Los Angeles-based digital marketing and data management platform company has an earnings yield of 28.7%. For the 52 weeks through Feb. 15, the share price declined 7%. The share price at close Friday was 153.5% above the 52-week low of $1.55 and 52.7% from the 52-week high of $6. The price-book ratio is 1.48 versus an industry median of 2.33 and the price-sales ratio is 2.44 compared to an industry median of 1.17.
According to the screenshot of the Peter Lynch chart of GuruFocus, the stock was trading affordably until the third quarter of 2018.
Source of the screenshot: GuruFocus.com
GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability and growth rating of 5 out of 10.
Disclosure: I have no positions in any securities mentioned.
