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Alberto Abaterusso
Alberto Abaterusso
Articles (1701) 

These 3 Large Caps Offer High Earnings Returns

Marathon Petroleum Corp tops the list

September 16, 2019 | About:

To find value opportunities, investors should look for stocks with earnings yields that at least double the returns of 20-year high-quality market corporate bonds.

The bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies. These companies are unlikely to have financial problems, implying a very low investment risk for their holders.

The holders of these 20-year high-quality corporate bonds receive a 3.82% monthly spot rate, according to the Federal Reserve Bank of St. Louis.

Thus, the following companies have price-earnings ratios (the inverse of earnings yield) of less than 13.09.

Shares of Marathon Petroleum Corp. (NYSE:MPC) closed at $53.29 on Friday for a market capitalization of $35.08 billion. The Findlay, Ohio-based oil and gas refining, marketing, retailing and transportation company has an earnings yield of 8.7% and a price-earnings ratio of 11.53, in line with the industry median.

The stock also has a price-book ratio of 1.06 versus the industry median of 1.11 and a price-sales ratio of 0.28, which is in line with the industry median.

The stock price decreased 9.7% year to date. The closing share price on Friday was 21.2% above the 52-week low of $43.96 and 66% below the 52-week high of $88.45.

The Peter Lynch chart indicates that the stock is not expensive.

GuruFocus assigned a moderate rating of 4.8 out of 10 for the financial strength and of 5 out of 10 for the profitability of the company.

Marathon Petroleum Corp. has a buy recommendation rating with an average target price of $76.37.

Shares of Aflac Inc. (NYSE:AFL) were around $51.77 at close on Friday for a market capitalization of $38.33 billion. The Columbus, Georgia-based life insurer has an earnings yield of 7.9% versus the industry median of 8.8% and a price-earnings ratio of 12.63 versus the industry median of 11.33.

The stock also has a price-book ratio of 1.38 versus the industry median of 0.96 and a price-sales ratio of 1.81 versus the industry median of 0.98.

The stock price increased 13.6% per share so far this year. The closing price on Friday was 24.9% above the 52-week low of $41.45 and 10.5% below the 52-week high of $57.18.

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

Aflac Inc. has a moderate rating of 4.4 out of 10 for financial strength but a low rating of 3 out of 10 for profitability.

As of Sept. 13, one analyst out of a total of six released a buy recommendation rating for shares of Aflac Inc., two analysts issued a hold recommendation rating and three analysts suggest selling the stock. The average target price is $51.

Shares of Bridgestone Corp. (OTCPK:BRDCY) were around $19.86 at close on Friday with a market capitalization of $28.07 billion.

The Japanese producer and seller of tires and rubber products has an earnings yield of 8.6% versus the industry median of 7.5% and a price-earnings ratio of 11.64 versus the industry median of 13.36.

Bridgestone also has a price-book ratio of 1.39 versus the industry median of 1.12 and a price-sales ratio of 0.89 versus the industry median of 0.56.

The stock price was up 3.5% so far this year. The closing price on Friday was 9.8% above the 52-week low of $18.08 and 2.8% below the 52-week high of $20.41.

The stock appears not expensive based on the Peter Lynch chart.

GuruFocus assigned a very positive financial strength rating of 7.1 out of 10 and a moderate profitability rating of 5 out of 10.

Analysts suggest holding shares of Bridgestone Corp. with an average target price of $20.37.

Disclosure: I have no positions in any securities mentioned.

Read more here: 

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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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