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. These bonds represent corporate loans issued by triple-A, double-A, and single-A rated companies.
The most recent observation of the Federal Reserve Bank of St. Louis indicates the monthly average spot rate of the 20-year bond is 4.38%.
Thus, the following stocks have a price-earnings ratio, which is the inverse of the earnings yield, of 11.42 or less as of April 23.
Further, as of Tuesday, these large Asian banks have a market capitalization of over $18.5 billion, have a price-book ratio of less than 1 and a buy recommendation rating with an average price target that brings at least 20% stock appreciation.
Sumitomo Mitsui Financial Group Inc. (SMFG, Financial) closed at $7.25 per share on Tuesday for a market capitalization of $50.54 billion. The Tokyo-based commercial bank has an earnings yield of 13.2% versus the industry median of 8.1% and a price-earnings ratio of 7.6 versus the industry median of 12.36.
The price-book ratio is 0.54 compared to the industry median of 1.11, and the price-sales ratio is 1.77 versus the industry median of 3.01.
The stock fell 15.6% over the past year. The closing share price on Tuesday was 14.5% above the 52-week low of $6.33 and 19.3% below the 52-week high of $8.65.
The Peter Lynch chart suggests the stock is fairly priced.
GuruFocus assigned a rating of 4 out of 10 for both financial strength and profitability and growth.
The stock has a buy recommendation rating and an average target price of $10.11 per share.
Shinhan Financial Group Co. Ltd. (SHG, Financial) closed at $39.83 per share on Tuesday for a market capitalization of $18.68 billion.
The South Korean bank has an earnings yield of 14.53% versus the industry median of 8.1% and a price-earnings ratio of 6.88 versus the industry median of 12.36.
The price-book ratio is 0.60 compared to the industry median of 1.11, and the price-sales ratio is 1.34 compared to the industry median of 3.01.
The stock has fallen 8.5% over the 52 weeks through April 23. The closing share price on Tuesday fell within the 52-week range of $34.02 to $45.35.
According to the Peter Lynch chart, the stock appears to trade cheaply.
Shinhan Financial has a GuruFocus financial strength rating of 3 out of 10 and profitability and growth rating of 4 out of 10.
The stock has a buy recommendation rating and an average target price of $48.57 per share.
Disclosure: I have no positions in any securities mentioned.
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