Screening for stocks that more than double the earnings yield of 20-year high-quality corporate bonds increases the likelihood of finding value opportunities.
These bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies and reward their holders with an average monthly spot rate of 3.82%, according to the Federal Reserve Bank of St. Louis.
As a result, the following companies have a price-earnings ratio, which is the inverse of the earnings yield, of less than 13.09.
Shares of Intel Corp. (INTC, Financial) closed at $50.72 on Friday for a market capitalization of $224.69 billion. The Santa Clara, California-based semiconductor company has an earnings yield of 8.5% versus the industry median of 5.1% and a price-earnings ratio of 11.82 versus the industry median of 19.53.
The price-book ratio is 3.03 versus the industry median of 1.65 and the price-sales ratio is 3.31 versus the industry median of 1.55.
The stock has gained 8% year to date. The closing price on Friday was 19.7% above the 52-week low of $42.36 and 17.5% below the 52-week high of $59.59.
According to the Peter Lynch chart, the stock is not expensive.
GuruFocus assigned a 6.8 out of 10 rating for the company's financial strength.
Wall Street recommends holding shares of Intel with an average target price of $53.90.
Shares of VMware Inc. (VMW, Financial) closed at $150.78 on Friday for a market capitalization of $61.61 billion. The Palo Alto, California-based software company has an earnings yield of 10% versus the industry median of 4% and a price-earnings ratio of 10.01 versus the industry median of 25.15.
The stock has a price-book ratio of 12.07 versus the industry median of 2.82 and a price-sales ratio of 6.61 versus the industry median of 2.33.
The stock is up 10% so far this year. The closing price on Friday was 17.2% above the 52-week low of $128.69 and 37.2% below the 52-week high of $206.80.
According to the Peter Lynch chart, the stock doesn’t appear to be expensive.
VMware has a rating of 5.9 out of 10 for its financial strength.
The stock has an overweight recommendation rating and an average target price of $172.28 per share.
Shares of HCA Healthcare Inc. (HCA, Financial) closed at $124.28 on Friday with a market capitalization of $42.38 billion. The Nashville, Tennessee-based provider of health care services has an earnings yield of 8.4% versus the industry median of 3.8% and a price-earnings ratio of 11.97 versus the industry median of 26.55.
The company has a price-sales ratio of 0.89 versus the industry median of 1.52.
The stock has been relatively flat so far this year. The closing price on Friday was 12.7% above the 52-week low of $110.31 and 18.6% below the 52-week high of $147.42.
The stock appears to be cheap based on the following chart.
GuruFocus assigned a financial strength rating of 4 out of 10.
Shares of HCA Healthcare have an overweight recommendation rating and an average target price of $153.22.
Disclosure: I have no positions in any securities mentioned.
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