For Immediate Release
Chicago, IL – April 21, 2020 – Stocks in this week’s article are Avid Technology, Inc. AVID, Navient Corp. NAVI, Sykes Enterprises, Inc. SYKE, Kirkland Lake Gold Ltd. KL and Select Medical Holdings Corp. SEM.
5 Stocks with High Earnings Yields to Enhance Your Portfolio
Investors often use P/E ratio and other valuation metrics to pick undervalued stocks with solid upside potential. However, one can also use another interesting ratio, which is simply the inverse of P/E ratio, i.e. earnings yield.
Earnings yield, expressed in percentage, is calculated as (Annual Earnings per Share/Market Price) x 100. While comparing stocks, if other factors are similar, investors can look out for stocks with higher earnings yield. This is because stocks with higher earnings yield have the potential to provide comparatively greater returns.
Amid economic downturn following the coronavirus outbreak, it is prudent to fortify your portfolio for such conditions. Especially in such scenarios, investors are on the lookout for stocks at great values. Firms with higher earnings yield are considered underpriced, while those with lower earnings yield are seen as overpriced.
Earnings yield can be used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In this situation, investing in the stock market would be a better option for a value investor.
However, you need to keep in mind that T-bills are risk free, while investing in stocks always comes with a caveat. Hence, it would be a good idea to add a risk premium to the Treasury yield, while comparing it with the earnings yield of a stock or the overall market.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/880235/5-stocks-with-high-earnings-yield-to-enhance-your-portfolio
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Avid Technology, Inc. (AVID) : Free Stock Analysis Report
Sykes Enterprises, Incorporated (SYKE) : Free Stock Analysis Report
Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
Navient Corporation (NAVI) : Free Stock Analysis Report
Kirkland Lake Gold Ltd. (KL) : Free Stock Analysis Report
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