Buy These 5 Value Stocks Boasting High Earnings Yield Right Away

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Value investing is a time-tested strategy that focuses on finding assets trading for less than their intrinsic value, allowing investors to buy such undervalued assets at a discount. This approach hinges on the idea that market prices often don’t fully reflect a company’s fundamentals, providing opportunities to benefit from market corrections in the long run.

A key metric for value investors is earnings yield, which offers insight into a stock’s profitability relative to its market price. Earnings yield is calculated by dividing a company’s earnings per share (EPS) by its current stock price (Earnings Yield = EPS / Current Stock Price). This figure represents the profit generated for each dollar invested, effectively serving as the inverse of the price-to-earnings (P/E) ratio. A higher earnings yield typically indicates that a stock may be undervalued and could provide growth potential, while a lower earnings yield could suggest overvaluation.

Pitney Bowes PBI, Mr. Cooper Group Inc. COOP, Barrick Gold GOLD, Quad Graphics QUAD and PDD Holdings Inc. PDD are a few solid high earnings yield picks for value investors.

Beyond identifying individual stocks, earnings yield also aids in comparing the stock market to fixed-income investments, like 10-year Treasury bonds. If the earnings yield of a market index surpasses the bond yield, it can indicate favorable conditions for investing in stocks over bonds, which is valuable for portfolio diversification.

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 five of the 23 stocks that qualified the screening:

Pitney Bowes: It is a global technology company powering billions of transactions — physical and digital — in the connected and borderless world of commerce. The Zacks Consensus Estimate for Pitney Bowes’ 2024 and 2025 earnings implies year-over-year growth of 850% and 176%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 7 cents, respectively, over the past seven days. PBI currently sports a Zacks Rank #1 and has a Value Score of A.

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