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3 Large-Cap Stocks Offer High Earnings Yields

Screening for securities that are more than doubling 20-year high-quality corporate bonds' earnings yields raises the possibility of gaining impressive margins.

These bonds represent corporate loans issued by companies that are triple-A, double-A and single-A rated.

The Federal Reserve Bank of St. Louis indicated that the monthly average spot rate of the 20-year bond is 3.97%.

As a result, the following stocks have an earnings yield of more than 7.94% or a price-earnings ratio of less than 12.59 as of July 26.

Moreover, the Peter Lynch chart suggests that these stocks are cheap.

Discover Financial Services (NYSE:DFS) traded around $92.91 per share at close on Friday for a market capitalization of $29.64 billion. The Riverwoods, Illinois-based provider of direct banking and payment services in the US. .has an earnings yield of 9.2%, which is nearly in line with the industry median of 9.1% or a price-earnings ratio of 10.87 versus the industry median of 11.

Also, the price-book ratio is 2.61 versus the industry median of 0.95, and the price-sales ratio is 2.88 compared to the industry median of 2.3.

The share price increased 57.53% so far this year. The share price at close Friday was 71% above the 52-week low of $54.36 and only 7% from the 52-week high of $92.98.

The stock seems to be priced fairly, according to the below Peter Lynch chart.

GuruFocus assigned a rating of 4 out of 10 for financial strength, and for profitability and growth.

The stock has an overweight recommendation rating and an average target price of $92.43.

PACCAR Inc. (NASDAQ:PCAR) traded around $71.67 per share at close on Friday for a market capitalization of $24.82 billion. The Bellevue, Washington-based worldwide producer of commercial trucks has an earnings yield of 9.5% versus the industry median of 9.1% or a price-earnings ratio of 10.56 versus the industry median of 11.02.

The stock also has a price-book ratio of 2.59 versus the industry median of 1.62 and a price-sales ratio of 0.99 compared to the industry median of 0.54.

The stock is up 25.43% so far this year. The share price at close Friday was 34.1% above the 52-week low of $53.43 and just 1.9% from the 52-week high of $73.

According to the Peter Lynch chart, the stock appears to trade cheaply.

PACCAR has a GuruFocus financial strength rating of 7 out of 10 and profitability and growth rating of 8 out of 10.

The stock has a hold recommendation rating and an average target price of $71.35 per share.

Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) traded around $37.59 per share at close on Friday with a market capitalization of approximately $22.59 billion. The German worldwide provider of kidney dialysis care services has an earnings yield of 9.5% versus the industry median of 4.1% or a price-earnings ratio of 10.52 versus the industry median of 24.53.

The stock also has a price-book ratio of 1.72 versus the industry median of 2.24 and a price-sales ratio of 1.24 versus the industry median of 1.63.

Year to date, the share price increased 16.05%. The share price at close Friday was 21.3% above the 52-week low of $30.99 and 42.1% from the 52-week high of $53.4.

The stock appears cheap according to the Peter Lynch chart.

GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 out of 10.

The stock has an overweight recommendation rating and an average target price of $46.47, representing a 23.6% increase from the share price at close on Friday.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.