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Alberto Abaterusso
Alberto Abaterusso
Articles (1665) 

3 High Earnings-Yield Stocks

CNOOC Ltd. tops the list

April 01, 2019 | About:

Investors may want to screen for stocks that are doubling 20-year, high-quality market corporate bonds in terms of return because these stocks are likely to show impressive margins.

The bonds represent the corporate loan issued by companies that are triple-A, double-A and single-A rated. The most recent observation on the Federal Reserve Bank of St. Louis’ website indicates the monthly average spot rate of the 20-year bonds is returning 4.43%.

Therefore, the following stocks have price-earnings ratios (the inverse of the earnings return) of less than 11.3 as of March 29. Further, these stocks have an inexpensive valuation according to the Peter Lynch chart and a high financial strength rating according to GuruFocus.

The first company is CNOOC Ltd. ADR (NYSE:CEO).

Based in Hong Kong, CNOOC is a large oil and gas exploration and producing company.

CNOOC's primary producing assets are offshore crude oil and natural gas assets located in the South China Sea and the Yellow Sea.

CNOOC generated revenues of nearly $35 billion in 2018.

Shares traded around $185.76 per share at close Friday for a market capitalization of $83.61 billion.

The price-earnings ratio is 10.65 versus an industry median of 11.83, the price-book ratio is 1.38 compared to the industry median of 1.30 and the enterprise value-Ebitda ratio is 7.11 versus an industry median of 7.99.

The balance sheet of CNOOC has a financial strength rating of 7 out of 10.

The stock has risen 22% so far this year, outperforming the S&P 500 index by 9%. The 52-week range is $138.99 to $202.38.

Wall Street issued an overweight recommendation rating on shares of CNOOC Ltd., meaning that the stock is foreseen to outperform either the industry or the overall market within 52 weeks with an average target price of $201.37.

The Peter Lynch chart suggests the stock is trading cheaply.

The second company is Biogen Inc. (NASDAQ:BIIB).

Based in Cambridge, Massachusetts, Biogen is a large drug manufacturer with annual sales of $13.5 billion in 2018.

The share price was $236.38 at close on Friday for a market capitalization of roughly $46.5 billion. The stock has a price-earnings ratio of 10.94 versus an industry median of 28.79, a price-book ratio of 3.57 versus an industry median of 4.10, and a price-sales ratio of 3.60.

The balance sheet of Biogen has a financial strength rating of 7 out of 10.

The stock has fallen 21.5% year to date, underperforming the S&P 500 index by 8.4%. The 52-week range is $216.12 to $388.67.

Wall Street issued a hold recommendation rating on shares of Biogen with an average target price of $260.88.

According to the Peter Lynch chart, the stock is cheap.

The third security is Phillips 66 (NYSE:PSX).

Based in Houston, Texas, Phillips 66 is an oil and gas refining and marketing company with an annual sales turnover of $111.5 billion in 2018. The company is refiner of crude oil and other feedstocks in the U.S. and Europe.

Shares closed at $95.17 on Friday with a market capitalization of roughly $43.29 billion.

The stock has a price-earnings ratio of 7.99 versus an industry median of 11.49, a price-book ratio of 1.76 versus an industry median of 1.75 and a price-sales ratio of 0.4 compared to the industry median of 0.42. The enterprise value-Ebitda ratio is 5.80 versus an industry median of 8.25.

The balance sheet of Phillips 66 has a financial strength rating of 7 out of 10.

So far this year, the stock has climbed 10.5%, underperforming the S&P 500 index by 2.6%. The 52-week range is $78.44 to $123.97.

Wall Street issued an overweight recommendation rating on shares of Phillips 66, meaning that the stock is foreseen to outperform either the industry or the overall market within 52 weeks with an average target price of $119.88.

The Peter Lynch chart suggests the stock is undervalued.

Disclosure: I have no positions in any securities mentioned.

About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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