5 High Earnings Yield Value Picks Amid Renewed US-China Tensions

Market Overview - Wall Street experienced significant gains in May, with the S&P 500 increasing by 6.2% and the Nasdaq rising by 9.6%, marking the best month for both indices since late 2023 [1] - Investor optimism was fueled by a temporary pause on new trade tariffs announced by Trump, alleviating fears regarding trade tensions with China and the EU [1] Geopolitical Risks - Despite the temporary relief, the threat of tariffs remains, as China accused the U.S. of violating their trade truce by tightening controls on AI chip exports and student visas, which has raised tensions again [2] - The interconnectedness of the U.S. and Chinese economies means that even minor disputes can significantly impact market stability [2] Investment Strategy - In uncertain times, investors are turning to value investing, focusing on companies with strong fundamentals that are undervalued [3] - Value stocks with high earnings yield can provide attractive returns, especially during periods of market volatility [4] Earnings Yield - Earnings yield is calculated by dividing a company's annual earnings per share (EPS) by its current stock price, indicating potential returns for investors [5] - A higher earnings yield suggests a stock may be undervalued compared to its peers, while a lower yield may indicate overvaluation [5][7] Stock Screening Criteria - A primary screening criterion for selecting stocks is an earnings yield greater than 10%, supplemented by estimated EPS growth, average daily volume, and current price thresholds [8][9][10] - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform their peers [10] Selected Value Stocks - Five value stocks with earnings yields exceeding 10% have been identified as appealing options amid rising U.S.-China tensions: AngloGold Ashanti (AU), Orchid Island Capital (ORC), LATAM Airlines (LTM), Priority Technology (PRTH), and Allianz (ALIZY) [11] - All five stocks show strong projected EPS growth through 2026 and meet liquidity, price, and growth criteria [11] Company Highlights - AngloGold Ashanti (AU): Expected earnings growth of 95% in 2025 and 6.7% in 2026, with a Zacks Rank of 1 and a Value Score of A [12] - Orchid Island Capital (ORC): Projected earnings growth of 394% in 2025 and 24.5% in 2026, Zacks Rank 1, Value Score B [13] - LATAM Airlines (LTM): Anticipated earnings growth of 27.5% in 2025 and 20% in 2026, Zacks Rank 1, Value Score A [14] - Priority Technology (PRTH): Expected earnings growth of 108% in 2025 and 34% in 2026, Zacks Rank 1, Value Score A [15] - Allianz (ALIZY): Projected earnings growth of 16.4% in 2025 and 9% in 2026, Zacks Rank 1, Value Score B [16]