Screening for stocks that more than double the earnings yield of 20-year high-quality corporate bonds increases the likelihood of discovering value opportunities.
These bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies. On average, they are rewarding their holders with a monthly spot rate of 3.82%, according to the Federal Reserve Bank of St. Louis.
As a result, the following companies have a price-earnings ratio, which is the inverse of the earnings yield, of less than 13.09.
Shares of The Toronto-Dominion Bank (TD, Financial) closed at $54.19 on Friday for a market capitalization of $98.79 billion. The Canadian bank has an earnings yield of 8.7% versus the industry median of 9% and a price-earnings ratio of 11.48 versus the industry median of 11.15.
The price-book ratio is 1.64 versus the industry median of 0.99 and the price-sales ratio is 3.26 versus the industry median of 2.78.
The stock has gained 9% year to date. The closing share price on Friday was 13.5% above the 52-week low of $47.73 and 14.4% below the 52-week high of $62.
According to the Peter Lynch chart, the stock is cheap.
GuruFocus assigned a rating of 4.8 out of 10 for the company's financial strength and a 4 out of 10 rating for its profitability and growth.
The stock has an overweight recommendation rating.
Shares of Banco Santander (Brasil) S.A. (BSBR, Financial) closed at $10.25 Friday for a market capitalization of $38.12 billion. The Brazilian bank has an earnings yield of 8.1% versus the industry median of 9% and a price-earnings ratio of 12.35 versus the industry median of 11.15.
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The stock has a price-book ratio of 1.71 compared to the industry median of 0.99 and a price-sales ratio of 1.81 versus the industry median of 2.78.
The stock is down 7.9% so far this year. The closing price on Friday was 30.4% above the 52-week low of $7.86 and 34% below the 52-week high of $13.73.
According to the Peter Lynch chart, the stock is not trading cheaply.
Banco Santander has a rating of 3 out of 10 for financial strength and a 4 out of 10 rating for profitability and growth.
The stock has a hold recommendation rating and an average target price of $13.46 per share.
Shares of Delta Air Lines Inc. (DAL, Financial) closed at $57.86 on Friday with a market capitalization of $37.62 billion. The Atlanta-based airline has an earnings yield of 11.6% versus the industry median of 8.3% and a price-earnings ratio of 8.64 versus the industry median of 12.11.
The company also has a price-book ratio of 2.82 versus the industry median of 1.53 and a price-sales ratio of 0.85 versus the industry median of 0.59.
The stock has gained 16% so far this year. The closing price on Friday was 28.3% above the 52-week low of $45.08 and 9.6% below the 52-week high of $63.44.
The stock appears to be cheap based on the Peter Lynch chart.
GuruFocus assigned a financial strength rating of 4.9 out of 10 and a profitability and growth rating of 7 out of 10.
Shares of Delta Air Lines have an overweight recommendation rating and an average target price of $70.22.
Disclosure: I have no positions in any securities mentioned.
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