Zacks.com Featured Highlights Include: Lithia, KB, Anixter, Navient And Jazz
Zacks Investment Research | Nov 11, 2019 09:03PM ET
For Immediate Release
Chicago, IL – November 12, 2019 - Stocks in this week’s article are Lithia Motors (NYSE:LAD) , KB Home (NYSE:KBH) , Anixter International Inc. (NYSE:AXE) , Navient Corporation (NASDAQ:NAVI) and Jazz Pharmaceuticals (NASDAQ:JAZZ) .
Bet on These 5 High-Earnings Yield Stocks to Build Your Portfolio
If you are not sure whether to invest your money in bonds or stocks, a key parameter that can show you the right direction is earnings yield. It is the reciprocal of price-to-earnings (P/E) ratio. This ratio is quite effective for determining undervalued stocks. Also, this ratio is useful for comparing stocks with the market or fixed-income securities.
Earnings yield can be calculated as (annual earnings per share/market price) x 100. While comparing similar stocks, the one with high earnings yield should fetch higher returns.
This ratio is effective for comparing the performance of the market with the 10-year Treasury yield. When the yield of the market index is higher than the 10-year Treasury yield, stocks can be said to be undervalued in comparison to bonds. This implies that investing in the stock market is a better option for a value investor.
However, while T-bills are free from risks, investing in stocks always carries some inherent risks. Hence, it will be wise to add a risk premium to the Treasury yield while comparing with the earnings yield of a stock or the broader market.
For the rest of this Screen of the Week article please visit Zacks.com at: Original post
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