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Zacks.com featured highlights include ANI Pharmaceuticals, Dana, Pitney Bowes, Priority Technology and Kingstone
Zacks Equity Research
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For Immediate Release

Chicago, IL – March 12, 2025 – Stocks in this week’s article are ANI Pharmaceuticals, Inc. ANIP, Dana Inc. DAN, Pitney Bowes PBI, Priority Technology Holdings, Inc. PRTH and Kingstone Companies, Inc. KINS.

5 High Earnings Yield Value Stocks Amid Renewed Recession Fears

The stock market is facing a sharp correction after two years of gains. Major U.S. indexes have entered correction territory, with technology and semiconductor stocks leading the decline. Investor sentiment has weakened due to uncertainty over tariffs and economic policies under the new administration.

Yesterday, the S&P 500 dropped 2.7%, hitting its lowest level since September. The Nasdaq fell 4%, marking its worst session since September 2022, while the Dow declined 2.08%. The Volatility Index surged to its highest level since August. There are concerns that the tariff uncertainty could push the economy into a recession, a possibility that President Trump has not ruled out.

With uncertainty and volatility rising, value investing could offer a strategic advantage. By focusing on fundamentally strong companies trading at attractive prices, investors can navigate market turbulence with a long-term perspective. One interesting ratio that you can consider for ferreting out attractively valued stocks is earnings yield.

ANI Pharmaceuticals, Inc., Dana Inc., Pitney Bowes, Priority Technology Holdings, Inc. and Kingstone Companies, Inc. are a few value stocks with high earnings yield that can fetch you handsome gains.

Understanding the Earnings Yield Metric

This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price. This metric measures the anticipated yield (or return) from earnings for each dollar invested in a stock today. While comparing stocks, if other factors are similar, the ones with higher earnings yield are considered undervalued, while those with lower earnings yield are seen as overpriced.

While earnings yield is nothing but the reciprocal of the P/E ratio, it is albeit a little more illuminating than the traditional P/E ratio as it also facilitates the comparison of stocks with fixed-income securities. Investors often compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns.

If the yield on a stock is lower than the 10-year Treasury yield, it would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued. In this situation, investing in the stock market would be a better option for a value investor.

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