Yahoo Finance 4 Top Stocks With High Earnings Yield to Power Your Returns
Despite U.S. consumer price inflation moderating in May, the Fed has scaled back its interest rate cut projections. Initially forecasting three cuts by the end of 2024, the Fed now plans just one this year. The timing of the rate cut is uncertain and analysts believe the Fed will proceed cautiously, awaiting further signs of inflation stabilization.
For investors, higher interest rates pose challenges but also create opportunities. Discerning investors can capitalize on the situation by evaluating intrinsic value, targeting resilient companies and exercising patience. This can potentially yield significant returns over the long term.
One key metric in the value investors’ toolbox is earnings yield, calculated as a company's earnings per share divided by its current stock price. Arko Corp. ARKO, American Axle & Manufacturing Holdings AXL, Crescent Energy CRGY and SkyWest Inc. SKYW are a few solid high earnings yield picks for value investors.
Unlock Value Through Earnings Yield Metric
Earnings yield, calculated as a company's earnings per share (EPS) divided by its current stock price (Earnings Yield = EPS / Current Stock Price), is a crucial metric for investors. A high earnings yield suggests potential undervaluation, presenting opportunities for growth. Conversely, a low earnings yield may indicate overvaluation, prompting caution among investors.
Earnings yield serves as a versatile tool for comparative analysis. Investors can juxtapose a market index's earnings yield with the 10-year Treasury yield, assessing the attractiveness of stocks versus fixed-income securities. When the market index's earnings yield exceeds the bond yield, it often signifies favorable conditions for stock investments. This insight is particularly beneficial for investors managing diversified portfolios comprising both equities and bonds.
The Winning Strategy
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential of generating solid returns. So, we have 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 12-month forward EPS estimate with the 12-month actual EPS.
Average Daily Volume (20 Days) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Current Price greater than or equal to $5.
Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Buy These High Earnings Yield Stocks
Here, we have highlighted four of the 39 stocks that qualified the screening:
Arko:The company operates convenience stores in the United States. The Zacks Consensus Estimate for ARKO’s 2024 earnings implies year-over-year growth of 125%. Estimates for 2024 and 2025 earnings per share have moved up by 45 cents and 42 cents, respectively, over the past 60 days. ARKO currently sports a Zacks Rank #1 and has a Value Score of A.
American Axle: The company is a supplier of driveline and drivetrain systems, modules and components for the automotive market. The Zacks Consensus Estimate for AXL’s 2024 earnings implies year-over-year growth of 544%. Estimates for 2024 and 2025 earnings per share have moved up by 2 cents and 17 cents, respectively, over the past 30 days. AXL currently sports a Zacks Rank #1 and has a Value Score of A.
Crescent Energy: The company is an explorer and producer of oil and natural gas. The Zacks Consensus Estimate for CRGY’s 2024 and 2025 earnings per share has moved up by 4 cents and 56 cents, respectively, over the past 30 days. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 112%. Crescent Energy currently sports a Zacks Rank #1 and has a Value Score of A.
SkyWest: The company operates as a regional airline in the United States. The Zacks Consensus Estimate for SKYW’s 2024 and 2025 earnings implies year-over-year growth of 787% and 17%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 2 cents each over the past 60 days. SkyWest currently sports a Zacks Rank #1 and has a Value Score of A.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance
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American Axle & Manufacturing Holdings, Inc. (AXL) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
ARKO Corp. (ARKO) : Free Stock Analysis Report
Crescent Energy Company (CRGY) : Free Stock Analysis Report
