Investors may want to consider securities that, as of Friday, are at least doubling 20-year high-quality market corporate bond yields. This increases the likelihood of finding value opportunities.
The bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies, which means they are unlikely to have financial issues. The Federal Reserve Bank of St. Louis indicated the 20-year bond’s monthly average spot rate is 4.26%.
Therefore, since the earnings yield is the inverse of the price-earnings ratio, the following securities have a ratio of less than 11.74 as of Friday.
Wall Street also has an overweight to buy recommendation rating for the following securities. Overweight means analysts expect the stock to outperform either the industry or the entire market within 12 months.
What’s more, the Peter Lynch line indicates these stocks are not overvalued.
The first company is Banco Macro SA (BMA, Financial), an Argentinian regional bank headquartered in Buenos Aires.
Shares closed at $56.11 on Friday for a market capitalization of $3.59 billion. The stock has an earnings yield of 312.5% versus the industry median of 8.1% and a price-earnings ratio of 0.32 versus the industry median of 12.36.
Banco Macro also has a price-book ratio of 0.06 versus the industry median of 1.11 and a price-sales ratio of 0.16 versus the industry median of 3.01.
GuruFocus assigned a rating of 4 out of 10 for the bank's financial strength and profitability and growth.
Wall Street issued an overweight recommendation rating with an average target price of $58.67 per share.
The stock has gained nearly 27% year to date, topping the S&P 500 index by 12%. The 52-week range is $32 to $83.62.
According to the Peter Lynch chart, the stock is cheap.
The second company is Enel Americas SA (ENIA, Financial).
Shares of the Chilean electricity utility company closed at $8.2 on Friday for a market capitalization of $9.42 billion. The stock has an earnings yield of 12.7% versus the industry median of 6.2% and a price-earnings ratio of 7.90 versus the industry median of 16.12.
The stock also has a price-book ratio of 1.43 versus the industry median of 1.52, a price-sales ratio of 0.70 versus the industry median of 1.61 and an enterprise value-Ebitda ratio of 4.54 compared to the industry median of 10.53.
GuruFocus assigned a rating of 5 out of 10 for the company's financial strength and an 8 out of 10 rating for its profitability and growth.
Wall Street issued an overweight recommendation rating with an average price target of $10.33 per share.
The stock has fallen 8.1% so far this year, underperforming the S&P 500 index by 23%. The 52-week range is $6.96 to $10.52.
The Peter Lynch chart suggests the stock is undervalued.
The third company is ProPetro Holding Corp (PUMP, Financial), a Midland, Texas-based provider of oilfield services.
Shares closed at $19.26 on Friday with a market capitalization of about $1.93 billion. The stock has an earnings yield of 11.6% versus the industry median of 5.5% and a price-earnings ratio of 8.59 versus the industry median of 18.04.
Additionally, the stock has a price-book ratio of 2.28 versus the industry median of 1.19 and an enterprise value-Ebitda ratio of 5.28 compared to the industry median of 11.92.
GuruFocus assigned a rating of 7 out of 10 for the company's financial strength and a 6 out of 10 rating for its profitability and growth.
Wall Street issued a buy recommendation rating with an average target price of $27.34 per share.
So far this year, the stock has climbed 56.3%, outperforming the S&P 500 index by nearly 42%. The 52-week range is $11.27 to $25.38.
The Peter Lynch chart indicates the stock is fairly priced.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 High Forward-Yield Stocks for the Dividend Investor
- 2 Falling Knives With No Debt
- Wall Street Suggests These 2 High-Performing Stocks
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
