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3 Non-Cyclical Stocks for the Value Investor

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·5 min read
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- By Alberto Abaterusso

Investors who are looking for high return investments might be interested in the three non-cyclical stocks listed below, as their earnings yields (as calculated via Joel Greenblatt's method) are in the double digits.

Greenblatt calculates the earnings yield as the company's earnings before interest (EBIT) divided by its enterprise value. The ratio provides a more reliable reference when applied to non-cyclical stocks whose earnings have little or no correlation with the business cycle (as the metric only looks at one year of business operations).


Supernus Pharmaceuticals Inc

The first stock to consider is Supernus Pharmaceuticals Inc (NASDAQ:SUPN), a Rockville, Maryland-based pharmaceutical company focusing on the development and commercialization of treatments for central nervous system diseases in the U.S.

The stock offers an earnings yield of 14.01% as of the most recent quarter. This stands below the upper limit of the past 10-year historical earnings yield range of -105.6% to 21.2%. Supernus Pharmaceuticals Inc's earnings yield ranks higher than 94% of 1,057 companies that are operating in the drug manufacturers industry.

The share price traded at around $20.13 at close on Thursday for a market capitalization of $1.06 billion and a 52-week range of $13.12 to $29.36. The stock lost 24.32% over the past year.

3 Non-Cyclical Stocks for the Value Investor
3 Non-Cyclical Stocks for the Value Investor

Its price-earnings ratio is 9.11 (versus the industry median of 24.39), the price-book ratio is 1.59 (versus the industry median of 2.28) and the price-sales ratio is 2.55 (versus the industry median of 2.67).

The company is currently not distributing dividends to its shareholders.

GuruFocus assigned a score of 5 out of 10 to both the company's financial strength rating and its profitability rating.

Wall Street sell-side analysts issued two strong buy recommendation ratings, four buy recommendation ratings and two hold recommendation ratings for the stock with an average target price of $28.75 per share. They have also predicted a rising EPS over the next five years at an average pace of 37% per annum.

BlackRock Inc., VANGUARD GROUP INC and ARMISTICE CAPITAL, LLC are the largest fund holders of the company, owning 16.91%, 10.30% and 4.19% of shares outstanding, respectively.

Enel Americas SA

The second stock to consider is Enel Americas SA (NYSE:ENIA), a Chilean electricity utility company operating in South America.

The compan had an earnings yield of 13.95% as of the most recent quarter. Enel Americas SA's current earnings yield stands in the middle of the 10-year historical range of 10.9% to 50.8% and ranks higher than 91% of 505 companies that are operating in the utilities - regulated industry.

The share price was trading at around $7.05 at close on Thursday for a market capitalization of $10.81 billion and a 52-week range of $5.22 to $11.21. The stock fell 25.6% over the past year.

3 Non-Cyclical Stocks for the Value Investor
3 Non-Cyclical Stocks for the Value Investor

Its price-earnings ratio is 8.26 (versus the industry median of 15.55), the price-book ratio is 1.16 (versus the industry median of 1.47) andthe price-sales ratio is 0.94 (versus the industry median of 1.35).

The company is distributing dividends to its shareholders. This year, it has already paid the two semi-annual cash dividends of 7.8 cents per common share on Feb. 6 and of 45.1 cents per common share on July 8 for a trailing twelve months and a forward dividend yield of 7.51% as of Oct. 22.

GuruFocus assigned a score of 4 out of 10 to the company's financial strength rating and of 8 out of 10 to its profitability rating.

Wall Street sell-side analysts issued three buy recommendation ratings and two hold recommendation ratings for the stock and have established an average target price of $10.41 per share. With regard to the company's future EPS, Wall Street predicts a 5.3% annual growth over the next five years.

ACADIAN ASSET MANAGEMENT LLC and JPMORGAN CHASE & CO are leading the group of the top fund holders of the company, both owning 0.85% of shares outstanding.

Turkcell Iletisim Hizmetleri AS

The third stock to consider is Turkcell Iletisim Hizmetleri AS (NYSE:TKC), a Turkish telecommunication services provider.

The company had an earnings yield of 11.09% as of the most recent quarter. Currently, Turkcell Iletisim Hizmetleri AS' earnings yield stands near the median of the 10-year historical range of 4.6% to 16.8% and ranks higher than 84% of 404 companies that are operating in the telecommunication services industry.

The share price closed at $5.19 on Thursday for a market capitalization of $4.53 billion and a 52-week range of $4.36 to $6.36. The stock lost nearly 7% over the past year.

3 Non-Cyclical Stocks for the Value Investor
3 Non-Cyclical Stocks for the Value Investor

Its price-earnings ratio is 10.84 (versus the industry median of 17.86), the price-book ratio is 1.83 (versus the industry median of 1.84) and the price-sales ratio is 1.33 (versus the industry median of 1.44).

The company is a dividend payer. In 2019, it distributed two semi-annual cash dividends of 4.6 cents per common share on June 27 and of 20 cents per common share on Nov. 8 for a trailing 12-month dividend yield of 3.6% as of Oct. 22.

GuruFocus assigned a score of 5 out of 10 to the company's financial strength rating and of 8 out of 10 to its profitability rating.

Wall Street sell-side analysts issued one strong buy recommendation rating, three buy recommendation ratings and one hold recommendation rating for the stock and have established an average target price of $5.90 per share. They have also forecasted the that company will increase the EPS by 33.80% per annum over the next five years.

Amid the top find holders of the company, MORGAN STANLEY is the leader with 1.12% of shares outstanding, followed by Oldfield Partners LLP with 0.78% and Macquarie Group Ltd, both with 0.31% of shares outstanding.

Disclosure: I have no position in any security mentioned.

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This article first appeared on GuruFocus.