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A Trio of High Earnings Return Stocks

In order to come across value opportunities, investors may want to consider stocks whose earnings returns have outperformed that of the 20-year high-quality market corporate bonds.

These bonds represent corporate loans that have been issued by triple-A, double-A and single-A rated companies, which have a high capacity to repay their loans. As a result, the U.S.-listed equities that represent these issuers of investment-grade bonds imply a very low investment risk for their shareholders.


Thus, investors may want to have a look at the following stocks, as their earnings returns have recently more than doubled the monthly spot rate that the 20-year high-quality market corporate bonds are granting to their possessors (3.35% as of April 7). These stocks also have price-earnings ratios of less than 14.93.

Fujitsu Ltd

Shares of Fujitsu Ltd (FJTSY) closed at a price of $18.26 per unit on Tuesday for a market capitalization of $18.28 billion.

The Japanese information and communication technology company grants an earnings return of 7.5% and a price-earnings ratio of 13.29.

The share price decreased by 2.6% so far this year, but Wall street sell-side analysts forecast that it will rebound, hitting a 26% upside from Tuesday's level for a price target of $23.01 per share. Analysts also recommend an overweight rating for this stock.

GuruFocus assigned a very good rating of 7 out of 10 for the company's financial strength and a positive rating of 6 out of 10 for its profitability.

CAE Inc

Shares of CAE Inc (NYSE:CAE) closed at a price of $12.39 per unit on Tuesday for a market capitalization of $3.23 billion.

The Canadian provider of training solutions to civil aviation, defence, security and healthcare organizations worldwide grants an earnings return of 7.7% and a price-earnings ratio of 12.93.

The share price was 53.2% down so far this year. However, Wall Street sell-side analysts forecast that it will start to uptrend again up to a $20.25 price target, marking a 63.4% rise. Analysts also recommend an overweight rating for the shares of this stock.

GuruFocus assigned a moderate rating of 4 out of 10 for the company's financial strength and a higher rating of 8 out of 10 for its profitability.

KBR Inc

Shares of KBR Inc (NYSE:KBR) closed at a price of $20.08 per unit on Tuesday for a market capitalization of $2.9 billion.

The Houston, Texas-based engineering and construction company grants an earnings yield of 7% and a price-earnings ratio of 14.24.

The share price has fallen by 34% so far this year, but Wall Street sell-side analysts forecast that it will bounce back, rising more than 50% to hit the price target of $30.60. Analysts also recommend an overweight rating for this stock.

GuruFocus assigned the stock a moderate rating of 5 out of 10 for its financial strength and a positive rating of 6 out of 10 for its profitability.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.