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Grab These 4 High Earnings Yield Value Stocks Right Away

Value investing, a prominent strategy in the investment world, focuses on identifying undervalued assets with long-term growth potential. This approach involves analyzing intrinsic asset value, prioritizing fundamentals over short-term market fluctuations. It offers stability amid market volatility and suits a cautious approach. By investing in stocks below their intrinsic values, value investing aims for substantial returns as stock prices align with actual fundamentals. One key ratio for identifying undervalued stocks is earnings yield.

Earnings yield is useful for investors concerned about the rate of return on an investment. This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price per share — the inverse of the price-to-earnings (P/E) ratio.

While comparing stocks, if other factors are similar, the one with higher earnings yield is considered undervalued. That’s because this metric measures the anticipated yield (or return) from earnings for each dollar invested in a stock today.

Earnings yield is not as widely used as P/E ratio as a valuation metric but investors most commonly compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns.

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If the yield on the stock is lower than the 10-year Treasury yield, the stock would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued.

You can unlock your portfolio value by investing in high earnings yield stocks like Xerox Holdings Corporation XRX, Century Communities, Inc. CCS, Pangaea Logistics Solutions PANL and Royal Caribbean Cruises RCL to fetch handsome long-term rewards.

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 to generate 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 Day) 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.

Our Picks

Here we discuss four of the 28 stocks that qualified the screen:

Headquartered in Connecticut, Xerox Holdings is engaged in the document management solutions business. The company's offerings include printers, copiers, software solutions, managed print services and cloud computing solutions.The Zacks Consensus Estimate for XRX’s 2024 and 2025 earnings implies year-over-year growth of 25% and 8.5%, respectively. The consensus mark for 2024 and 2025 earnings per share has moved up by 21 cents and 20 cents, respectively, over the past 30 days. Xerox Holdings currently sports a Zacks Rank #1 and has a Value Score of A.

Colorado-based Century Communities is a home building and construction company. The company is involved in land acquisition, development, entitlements, and the construction, marketing, and sale of diverse single-family residential projects. The Zacks Consensus Estimate for CCS’s 2024 and 2025 earnings implies year-over-year growth of 24.3% and 15%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by $1.48 and $1.95, respectively, over the past 30 days. Century Communities currently sports a Zacks Rank #1 and has a Value Score of A.

Headquartered in Rhode Island, Pangaea Logistics offers seaborne dry bulk transportation services to industrial clients, transporting a wide range of cargoes, including grains, pig iron, hot-briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The company’s services cater to sectors such as steel, aluminum, energy, agriculture and more. The Zacks Consensus Estimate for PANL’s 2024 earnings implies year-over-year growth of 24.7%. Estimates for 2024 earnings per share have moved up by 20 cents over the past 60 days. Pangea Logistics currently sports a Zacks Rank #1 and has a Value Score of A.

Based in Miami, Royal Caribbean primarily serves the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments. It operates 64 ships on diverse itineraries worldwide that include roughly 1,000 destinations on all seven continents. The Zacks Consensus Estimate for RCL’s 2024 and 2025 earnings implies year-over-year growth of 46% and 18%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 13 cents and 8 cents, respectively, over the past seven days. Royal Caribbean currently sports a Zacks Rank #1 and has a Value Score of B.Top of Form

You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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DisclosureOfficers, 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 athttps://www.zacks.com/performance.

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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report

Xerox Holdings Corporation (XRX) : Free Stock Analysis Report

Century Communities, Inc. (CCS) : Free Stock Analysis Report

Pangaea Logistics Solutions Ltd. (PANL) : Free Stock Analysis Report

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