6 high-yielding choices you can’t miss
If you are not sure whether you are investing your money in bonds or stocks, an important metric that can point you in the right direction is earnings yield. It is the inverse of the price / earnings ratio. This ratio is very useful in determining which stocks are undervalued. Also, it is very effective in comparing stocks with the market or fixed income securities.
The profit return can be calculated as (annual earnings per share / market price) x 100. By comparing similar stocks, the one with a high profit return should generate higher returns.
This ratio is very effective in comparing the performance of the market with the yield of the 10-year Treasury. When the return of the stock index is higher than the yield of the 10-year Treasury, it can be said that stocks are undervalued relative to bonds. This implies that investing in the stock market is a better option for a value investor.
While treasury bills are risk free, investing in stocks always comes with inherent risks. Therefore, it will be wise to add a risk premium to the Treasury’s return while comparing it to the return on earnings of a stock or the broader market.
We have set an earnings return above 10% as our primary selection criteria, but this alone cannot be used to select stocks that have the potential to generate strong returns. We have therefore added the following parameters to the screen:
Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the estimated 12-month forward EPS with the actual 12-month EPS.
Average daily volume (20 days) greater than or equal to 100,000: A high volume of transactions implies that a stock has adequate liquidity.
Current price greater than or equal to $ 5.
Shares quoted for purchase: Stocks with a Zacks # 1 (strong buy) or 2 (buy) rank are known to outperform their peers in any type of market environment. You can see the full list of today’s Zacks # 1 Rank stocks here.
Below, we’ve highlighted six of the 60 actions that crossed the screen.
ArcelorMittal MT: It is the world’s leading steel and mining company based in Luxembourg. With a presence in over 60 countries, this Zacks Rank # 1 company operates a balanced portfolio of cost-competitive steel plants in developed and developing countries. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 43.7% and 1,776.2%, respectively. The consensus mark for current year earnings has shifted 30.2% north in the past 60 days.
Meritage Houses Company MTH: Based in Scottsdale, this Zacks Rank # 1 company is primarily focused on building and selling single-family homes for entry-level buyers, first-time buyers, luxury buyers and active adults in the regions. historically fast growing United States. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 15.2% and 72.3%, respectively. The consensus profit mark for the current year has shifted 28.9% north in the past 60 days.
Silicon motion technology SIMO: Based in Atlanta, Silicon Motion is a leading developer of microcontroller integrated circuits for NAND flash storage devices. The company enjoys strong demand for solid-state drives, eMMC and UFS controllers. He currently sports a Zacks Rank # 1. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 67.2% and 82.1%, respectively. The consensus mark for 2021 earnings has risen 13.2% in the past 60 days.
Donnelley Financial Solutions, Inc. DFIN: This Chicago-based software and services provider offers content creation, management and distribution services, as well as multilingual localization and data analysis services. The company currently has a Zacks Rank # 1. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 3.3% and 96.6%, respectively. The consensus mark for 2021 earnings has moved 22% north in the past 60 days.
Ironwood Pharmaceuticals, Inc. IRWD: Based in Cambridge, Collegium focuses on the development and commercialization of treatments primarily targeting gastrointestinal diseases. The company currently sports a Zacks Rank # 1. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 5% and 60.7%, respectively. The consensus mark for current year earnings has moved north 6 cents in the past 60 days.
Collegium Pharmaceuticals, Inc. COLL: Collegium, based in Cumberland, is a specialty pharmaceutical company that develops and markets prescription drugs as well as over-the-counter drugs for the treatment of disorders of the central nervous system, respiratory system and skin. The company currently sports a Zacks Rank # 1. Zacks’ consensus estimate for 2021 sales and earnings implies year-over-year growth of 9.9% and 392.1%, respectively. The consensus mark for 2021 results has been revised up 41.6% in the past 60 days.
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Disclosure: The officers, directors and / or employees of Zacks Investment Research may own or have sold securities short and / or hold long and / or short positions in the options mentioned in this document. An affiliated investment advisory firm may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document..
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Ironwood Pharmaceuticals, Inc. (IRWD): Free Stock Analysis Report
ArcelorMittal (MT): Free Stock Analysis Report
Meritage Homes Corporation (MTH): Free Inventory Analysis Report
Silicon Motion Technology Corporation (SIMO): Free Stock Analysis Report
Collegium Pharmaceutical, Inc. (COLL): Free Stock Analysis Report
Donnelley Financial Solutions Inc. (DFIN): Free Stock Analysis Report
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