Selecting securities whose earnings return is more than double the monthly spot rate of the 20-year high-quality market corporate bonds grants a higher likelihood to unearth high-return investments, in my opinion. This class of investment-grade bonds represents corporate loans issued by triple-A, double-A and single-A rated companies.
Since these bonds grant a monthly spot rate of 2.92% as of November 2020, the following three stocks may be of interest to investors, as they are granting earnings returns of more than 5.84% at price-earnings ratios of less than 17.12.
BHP Group PLC
Shares of BHP Group PLC (BBL, Financial) were trading at $51.74 per unit at close on Monday for a market capitalization of about $133.03 billion.
The Australian explorer, developer and producer of oil and gas and miner of base and precious metals grants an earnings return of 6.24% and has a price-earnings (PE) without non-recurring items (NRI) ratio of 16.02.
The share price has risen by 8.97% over the past year for a 52-week range of $23.64 to $52.97.
GuruFocus assigned a rating of 6 out of 10 for the company's financial strength and of 8 out of 10 for its profitability.
Wall Street sell-side analysts recommend an overweight rating for this stock and have set an average target price of $38.59 per share.
PT Telekomunikasi Indonesia (Persero) Tbk
Shares of PT Telekomunikasi Indonesia (Persero) Tbk (TLK, Financial) traded at a price of $23.06 each at close on Monday for a market capitalization of about $22.84 billion.
The Indonesian global provider of telecommunication services gives an earnings return of 5.90% and has a PE without NRI ratio of 16.94.
The stock has declined by 18.11% over the past year, determining a 52-week range of $16.06 to $29.37.
GuruFocus assigned a rating of 5 out of 10 to the company's financial strength and of 9 out of 10 to its profitability.
Wall Street sell-side analysts recommend a buy rating for this stock and have produced an average target price of $27.46 per share.
KB Financial Group Inc
Shares of KB Financial Group Inc (KB, Financial) were trading at $42.46 per unit at close on Monday for a market capitalization of $16.76 billion.
The South Korean bank providing various banking and other financial services to individuals and businesses in South Korea and internationally grants an earnings return of 18.62% and has a PE without NRI ratio of 5.37.
The stock has risen 1.43% over the past year, determining a 52-week range of $20.93 to $43.95.
GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and of 5 out of 10 to its profitability.
Wall Street sell-side analysts recommend a buy rating for this stock and have established an average target price of $48.37 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Stocks With Attractive Forward Price-Earnings Ratios
- 3 Low Price-Sales Ratio Stock Picks
- 3 Stocks Growing Capex Fast
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