5 Must-Have High Earnings Yield Stocks for Value Investors

Economic Overview - The October Personal Consumption Expenditures (PCE) Price Index indicates a re-acceleration of inflation, with consumer prices rising 2.3% year over year, up from 2.1% in September, which raises questions about the Federal Reserve's timeline for further rate cuts [1] Value Investing Strategy - Amid inflationary pressures and policy uncertainty, value investing is highlighted as a resilient strategy, focusing on stocks undervalued relative to their intrinsic worth [2] - Earnings yield is a key metric for identifying attractive value opportunities, calculated as annual earnings per share (EPS) divided by market price [3] - A higher earnings yield indicates a stock is undervalued compared to those with lower earnings yield, which are seen as overpriced [3] Comparison with Fixed-Income Securities - Earnings yield serves as a more illuminating metric than the traditional P/E ratio, allowing for comparisons with fixed-income securities like the 10-year Treasury yield [4] - If a stock's yield is lower than the 10-year Treasury yield, it is considered overvalued relative to bonds, while a higher yield indicates it is undervalued [5] Stock Screening Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by estimated EPS growth for the next 12 months greater than or equal to the S&P 500 [6] - Additional criteria include an average daily volume greater than or equal to 100,000 and a current price of at least $5 [7][8] Selected Stocks - Pitney Bowes (PBI): Expected earnings growth of 850% and 176% for 2024 and 2025, respectively, with a Zacks Rank 1 and Value Score of A [9] - Mr. Cooper Group Inc (COOP): Anticipated earnings growth of 62% and 29% for 2024 and 2025, respectively, with a Zacks Rank 1 and Value Score of B [11] - BrightSphere Investment Group (BSIG): Projected earnings growth of 46% and 12% for 2024 and 2025, respectively, with a Zacks Rank 1 and Value Score of B [12] - Qifu Technology Inc. (QFIN): Expected earnings growth of 55% and 12% for 2024 and 2025, respectively, with a Zacks Rank 1 and Value Score of A [13] - Quad Graphics (QUAD): Forecasted earnings growth of 62% and 29% for 2024 and 2025, respectively, with a Zacks Rank 2 and Value Score of A [14]