Seeking Alpha
Value
Profile| Send Message|
( followers)  

Interested in earning dividend income? Looking for undervalued stocks? Do you prefer companies with strong profits? We ran a screen you might be interested in.

The Price/Earnings ratio is one of the most commonly used price-multiple metrics. Often, EPS from the last four quarters is used to derive this number. A firm that has a high P/E ratio generally indicates that investors have high expectations of the firm relative to future earnings growth. By the opposite token, investors generally have lower expectations of a firm with a low P/E ratio. A firm that holds a P/E below 10 could be viewed as having "value investment" potential. One thing to remember is that EPS is an accounting measure that could be potentially manipulated. Thus the P/E is only as good as the quality of the earnings.

The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecast earnings instead. While this number might not be as accurate because it uses "forecast" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.

EPS growth illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

We first looked for stocks with a very high yield (more than 5%). We then screened for businesses that are trading at a discount (P/E<10)(forward P/E<10). We then looked for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(1-year operating margin>15%). We did not screen out any market caps or sectors.

Do you think these stocks will offer healthy returns? Use our screened list as a starting point for your own analysis.

1) SeaCube Container Leasing Ltd. (NYSE:BOX-OLD)

Sector:Services
Industry:Rental & Leasing Services
Market Cap:$377.19M
Beta:-

SeaCube Container Leasing Ltd. has a Dividend Yield of 6.02% and Payout Ratio of 46.85% and Price/Earnings Ratio of 9.02 and Forward Price/Earnings Ratio of 6.76 and Earnings Per Share Growth Rate of 11.70% and Operating Profit Margin of 22.45%. The short interest was 2.06% as of 05/15/2012. SeaCube Container Leasing Ltd. operates as a container leasing company worldwide. It principally engages in the acquisition, leasing, re-leasing, and subsequent sale of refrigerated and dry containers, and generator sets. The company's containers are used to ship products internationally and facilitate movement of goods via multiple transportation modes, including ships, rail, and trucks.

2) Capstead Mortgage Corp. (NYSE:CMO)

Sector:Financial
Industry:REIT - Diversified
Market Cap:$1.28B
Beta:0.47

Capstead Mortgage Corp. has a Dividend Yield of 12.56% and Payout Ratio of 103.18% and Price/Earnings Ratio of 7.65 and Forward Price/Earnings Ratio of 7.87 and Earnings Per Share Growth Rate of 15.07% and Operating Profit Margin of 66.67%. The short interest was 4.36% as of 05/15/2012. Capstead Mortgage Corporation operates as a self-managed real estate investment trust. It invests in leveraged portfolio of residential mortgage pass-through securities consisting of adjustable-rate mortgage securities issued and guaranteed by government-sponsored enterprises or by an agency of the federal government. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.

3) Cypress Sharpridge Investments (NYSE:CYS)

Sector:Financial
Industry:REIT - Residential
Market Cap:$1.59B
Beta:-

This company has a Dividend Yield of 14.61% and Payout Ratio of 169.95% and Price/Earnings Ratio of 9.99 and Forward Price/Earnings Ratio of 6.68 and Earnings Per Share Growth Rate of 185.99% and Operating Profit Margin of 81.96%. The short interest was 11.28% as of 05/15/2012. .

4) Crexus Investment Corp. (NYSE:CXS)

Sector:Financial
Industry:REIT - Diversified
Market Cap:$782.29M
Beta:-

Crexus Investment Corp. has a Dividend Yield of 10.58% and Payout Ratio of 75.70% and Price/Earnings Ratio of 6.59 and Forward Price/Earnings Ratio of 8.88 and Earnings Per Share Growth Rate of 163.94% and Operating Profit Margin of 97.06%. The short interest was 2.40% as of 05/15/2012. CreXus Investment Corp., through its subsidiaries, operates as a commercial real estate company. It acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial real properties, commercial mortgage-backed securities, other commercial real estate-related assets, and agency residential mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes.

5) Alliance Resource Partners LP (NASDAQ:ARLP)

Sector:Basic Materials
Industry:Industrial Metals & Minerals
Market Cap:$2.17B
Beta:0.79

Alliance Resource Partners LP has a Dividend Yield of 6.98% and Payout Ratio of 49.02% and Price/Earnings Ratio of 7.66 and Forward Price/Earnings Ratio of 7.94 and Earnings Per Share Growth Rate of 21.60% and Operating Profit Margin of 21.52%. The short interest was 0.92% as of 05/15/2012. Alliance Resource Partners, L.P. engages in the production and marketing of coal primarily to utilities and industrial users in the United States.

6) Homeowners Choice, Inc. (HCII)

Sector:Financial
Industry:Property & Casualty Insurance
Market Cap:$126.64M
Beta:0.63

Homeowners Choice, Inc. has a Dividend Yield of 5.32% and Payout Ratio of 23.98% and Price/Earnings Ratio of 7.27 and Forward Price/Earnings Ratio of 5.76 and Earnings Per Share Growth Rate of 64.74% and Operating Profit Margin of 22.40%. The short interest was 2.75% as of 05/15/2012. Homeowners Choice, Inc., an insurance holding company, provides property and casualty insurance in Florida. The company provides property and casualty homeowners' insurance, condominium owners' insurance, and tenants' insurance to individuals owning property. It offers its products and services through through its subsidiaries and independent agents.

Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.

Source: 6 Undervalued, High-Yield Stocks Raking In The Profits