Selecting stocks whose earnings yields double the monthly spot rate of 3.51% on 20-year high-quality market corporate bonds enhances the likelihood of finding value opportunities. The bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies. Most likely, these companies will rarely encounter financial problems that they can't solve.
The following securities offer earnings historical yields of more than 7% and trade their earnings for less than 14.25 times their price. Wall street sell-side analysts have also issued positive recommendation ratings for them.
TIM Participacoes S.A.
The first company under consideration is TIM Participacoes S.A. (TSU, Financial).
Shares of the Brazilian telecommunication services company closed at $19.44 on Thursday, Jan. 9 for a market capitalization of $9.41 billion.
The stock has an earnings yield of 9% versus the industry median of 5.4% and a price-earnings ratio of 11.12 versus the industry median of 18.68.
The stock has fallen 11.23% over the past five years through Jan. 9. As a result, it is trading below its fair price based on the Peter Lynch chart.
GuruFocus assigned a rating of 7 out of 10 for both the company's financial strength and its profitability.
The stock grants a forward dividend yield of 1.62% as of Thursday. Wall Street recommends an overweight recommendation rating.
MVB Financial Corp
The second company under consideration is MVB Financial Corp. (MVBF, Financial).
Shares of the Fairmont, West Virginia-based provider of banking and mortgage products and services closed at $23.05 on Thursday for a market capitalization of $272.55 million.
The stock has an earnings yield of nearly 9% versus the industry median of 8.3% and a price-earnings ratio of 11.35 versus the industry median of 12.07.
The stock price is up 54.4% over the past five years, reaching a market valuation that seems cheap based on the Peter Lynch chart.
MVB Financial Corp has received a rating of 2 out of 10 for its financial strength and a rating of 4 out of 10 for its profitability.
The stock grants a forward dividend yield of 1.2% as of Thursday and has received an overweight recommendation rating from Wall Street sell-side analysts.
SB Financial Group
The third company under consideration is SB Financial Group Inc (SBFG, Financial).
Shares of the Defiance, Ohio-based provider of commercial banking and wealth management services closed at $19.05 on Thursday with a market capitalization of $121.85 million.
The stock has an earnings yield of 7.7%, which is a little bit below the industry median of 8.3%. The price-earnings ratio of 13.05 is slightly higher than the industry median of 12.07.
The stock price has grown 101.2% in the past five years through Jan. 9. Nevertheless, it appears fairly-priced according to the following Peter Lynch chart.
GuruFocus assigned the company a rating of 4 out of 10 for both financial strength and profitability.
The stock offers a forward dividend yield of 1.99% as of Thursday. Wall Street issued a buy recommendation rating for its shares.
Disclosure: I have no positions in any securities mentioned.
GuruFocus 15-year anniversary promotion
The holiday season is here, and so is GuruFocus’s 15-year anniversary! In order to celebrate, we are offering an exclusive holiday discount of up to 30% off on our GuruFocus Premium Membership.
Join now to get GuruFocus Premium membership for only $399/Year! In addition, save an extra $100 when you upgrade to our PremiumPlus Membership, and enjoy $100 off the price of each additional region you add to the subscription.
Don’t miss out on this once-in-a-decade deal! You can sign up for the discount price by clicking this link. Happy holidays!
Read more here:
