Zacks.com Featured Highlights: Tata Motors, POSCO, Newtek Business Services And Chemours
Zacks Investment Research | Nov 28, 2017 09:32PM ET
For Immediate Release
Chicago, IL – November 29, 2017 - Stocks in this week’s article Tata Motors Limited (NYSE:TTM) , POSCO (NYSE:PKX) , Newtek Business Services Corp. (NASDAQ:NEWT) and The Chemours Company (NYSE:CC) .
4 High Earnings Yield Stocks to Boost Your Portfolio
Some financial parameters are vital in making a prudent investment decision. In fact, sometimes investors are clueless about whether to put their money in stocks or bonds. In such a situation, a correct financial metric can show the right direction. One such financial parameter is earnings yield. It is the reciprocal of the price-to-earnings (P/E) ratio. In fact, this ratio comes in handy in tracking undervalued stocks. It is also very useful for comparing stocks with market or fixed income securities.
Earnings yield is calculated as (Annual Earnings per Share/Market Price) x 100. This is very helpful in comparing stocks belonging to the same sector or industry. The stock with higher earnings yield is likely to produce better returns.
This ratio is also useful for comparing the performance of a market index with the 10-year Treasury yield. When the yield of the market index is more than the 10-year Treasury yield, the stocks can be considered as undervalued in comparison to bonds. This gives an indication that investing in the stock market is a better option for a value investor.
Investment in Treasury-bills is free of risks. However, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to Treasury yield while comparing it with the earnings yield of a stock or the broader market.
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