Market Overview - Recent market gains have been driven by easing U.S.-China trade tensions, softer inflation, and strong first-quarter 2025 results, but uncertainty persists [1] - Many companies are issuing cautious outlooks or withdrawing guidance due to rising costs, subdued consumer demand, and shaken business confidence [1] Tariff Impact - Although fears regarding tariffs have lessened, a 10% tariff remains a new baseline, indicating that trade-related pressures could re-emerge [2] - Economic indicators and earnings reports are expected to reveal the long-term effects of tariffs as the year progresses [2] Investment Strategy - Volatility remains in the market, and the current rally appears fragile, suggesting that value investing may be a prudent strategy [3] - Value investing focuses on fundamentally strong companies trading below their intrinsic worth, providing resilience amid market fluctuations [3] Value Stocks - Notable value stocks with high earnings yield include Aris Mining Corporation (ARMN), LATAM Airlines Group (LTM), Priority Technology Holdings Inc. (PRTH), Heritage Insurance Holdings Inc. (HRTG), and Pagaya Technologies Ltd. (PGY) [4] Earnings Yield Metric - Earnings yield, calculated as annual earnings per share (EPS) divided by market price, is a useful metric for identifying attractively valued stocks [5] - Stocks with higher earnings yield are considered undervalued compared to those with lower earnings yield [5] Stock Comparison - Earnings yield can be compared to prevailing interest rates, such as the 10-year Treasury yield, to assess relative value [6] - A stock with a yield lower than the 10-year Treasury yield is deemed overvalued, while a higher yield indicates undervaluation [7] Screening Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by estimated EPS growth and average daily volume [8][9] - Additional parameters include a current price greater than or equal to $5 and stocks with a Zacks Rank 1 (Strong Buy) or 2 (Buy) [10] Company Highlights - Aris Mining Corporation (ARMN): Expected earnings growth of 226.5% and 80.6% for 2025 and 2026, respectively, with a Zacks Rank 1 and Value Score of A [12] - LATAM Airlines Group (LTM): Projected earnings growth of 27.5% and 20% for 2025 and 2026, respectively, also with a Zacks Rank 1 and Value Score of A [13] - Priority Technology Holdings Inc. (PRTH): Anticipated earnings growth of 108% and 34% for 2025 and 2026, with a Zacks Rank 1 and Value Score of A [14] - Heritage Insurance Holdings Inc. (HRTG): Expected earnings growth of 62% and 13% for 2025 and 2026, with a Zacks Rank 1 and Value Score of B [15] - Pagaya Technologies Ltd. (PGY): Projected earnings growth of 195% and 28% for 2025 and 2026, with a Zacks Rank 1 and Value Score of B [16]
5 Value Stocks With High Earnings Yield for Handsome Gains