Investors may want to consider stocks that, as of Friday, are beating 20-year high-quality market corporate bond yields by 100% or more. This increases the chances of discovering a good value stock.
The bonds represent corporate loans issued by triple-A, double-A and single-A rated companies, which means they are unlikely to have financial problems. The most recent monthly observation on the spot rate of the 20-year bond indicates a 4.43% yield.
Thus, since the earnings yield is the inverse of the price-earnings ratio, the following stocks are trading for less than 11.3 times earnings as of Friday.
Further, these companies have a price-book ratio of less than 1 and a high GuruFocus financial strength rating.
The first company is BOS Better Online Solutions Ltd. (BOSC, Financial), an Israel-based provider of radio frequency identification, mobile and supply chain solutions.
Shares were trading around $2.99 at close on Friday for a market capitalization of $10.91. The price-earnings ratio is 10.31 versus an industry median of 24.7, the price-book ratio is 0.92 compared to the industry median of 2.22 and the financial strength rating is 7 out of 10.
The stock has climbed 38% so far this year, outperforming the S&P 500 Index by 25%. The closing price on Friday fell within a 52-week range of $1.9 to $3.99.
The Peter Lynch chart suggests that the stock is not expensive.
The second company is Israel-based G. Willi-Food International Ltd. (WILC, Financial), an international distributor of various food products.
The share price was $7.93 at close on Friday for a market capitalization of $104.99 million. The stock has a price-earnings ratio of 10.86 versus an industry median of 18.85, a price-book ratio of 0.86 versus an industry median of 1.73 and a financial strength rating of 9 out of 10.
The stock has gained 13.4% year to date, outperforming the S&P 500 index by 0.8%. The 52-week range is $6.5 to $8.39.
The Peter Lynch chart suggests the stock is not expensive.
The third company is Tantech Holdings Ltd. (TANH, Financial).
Based in Lishui, China, Tantech Holdings produces bamboo-based charcoal products.
Shares closed at $1.61 on Friday with a market capitalization of roughly $46.21 million. The stock has a price-earnings ratio of 7.67 versus an industry median of 12.82, a price-book ratio of 0.47 versus an industry median of 1.65 and a financial strength rating of 7 out of 10.
So far this year, the stock has declined 7.5%, underperforming the S&P 500 index by 20.1%. The 52-week range of $1.1 to $3.78.
According to the Peter Lynch chart, the stock appears to be cheap.
Disclosure: I have no positions in any securities mentioned.
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