If you screen for stocks that are doubling 20-year high-quality market corporate bonds in terms of return, you are more likely to succeed with your investments.
The bonds represent the corporate loan issued by companies that are triple-A, double-A and single-A rated. The Federal Reserve Bank of St. Louis indicated the monthly average spot rate of the 20-year bonds is yielding 4.57%.
Therefore, the screener looked for companies that have a price-earnings ratio of less than 11 and an earnings yield of 9.09% or more as of March 7. The price-earnings ratio is the inverse of the earnings yield. Further, these companies have a price-book ratio of less than 1 and a high financial strength rating according to GuruFocus.
The first company is Greenbrier Companies Inc. (GBX, Financial).
Based in Lake Oswego, Oregon, Greenbrier produces railroad freight car equipment.
Shares were trading around $38.63 per share at close on Thursday for a market capitalization of $1.25 billion. The price-earnings ratio is 8.78 versus an industry median of 15.94, the price-book ratio is 1 compared to the industry median of 1.26 and the financial strength rating is 7 out of 10.
The stock has fallen 2% so far this year, underperforming the S&P 500 index by 12%. The closing price on Thursday fell within a 52-week range of $37.44 to $64.87.
The stock has an overweight recommendation rating and an average price target of $52.20 per share.
The Peter Lynch chart suggests the stock is trading cheaply.
The second company is Servotronics Inc. (SVT, Financial).
Based in Elma, New York, Servotronics produces electronic components.
The share price was $11.62 at close on Thursday for a market capitalization of $30.01 million. The stock has a price-earnings ratio of 9.14 versus an industry median of 16.75, a price-book ratio of 0.96 versus an industry median of 1.47 and a financial strength rating of 8 out of 10.
The stock has gained 17% year to date, outperforming the S&P 500 index by 7.1%. The 52-week range is $8.69 to $12.70.
The Peter Lynch chart suggests the stock is undervalued.
The third security is Aberdeen Emerging Markets Equity Income Fund Inc. (AEF, Financial).
Based in London, Aberdeen is a global scale asset management firm that focuses on creating long-term value for its clients through investments in a broad range of securities.
Shares closed at $7.15 on Thursday with a market capitalization of roughly $426.76 million.
The stock has a price-earnings ratio of 7.07 versus an industry median of 12.95, a price-book ratio of 0.74 versus an industry median of 0.99 and a financial strength rating of 7 out of 10.
So far this year, the stock has climbed 12.4%, topping the S&P 500 index by 2.7%. The share price falls within the 52-week range of $6.13 to $9.4.
According to the Peter Lynch chart, the stock is cheap.
Disclosure: I have no positions in any securities mentioned.
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