5 High Earnings Yield Stocks to Buy Ahead of Potential Fed Rate Cuts

Wall Street closed in the green yesterday, with all three major indexes inching higher. The Nasdaq Composite gained 0.45% to reach a record 21,798.70, while the S&P 500 added 0.21% to end at 6,495.15. The Dow also climbed roughly 114 points, finishing at 45,514.95.

Markets are bracing for next week’s Fed meeting on Sept. 16-17, where a rate cut now looks almost certain after last Friday’s softer-than-expected jobs report. The CME FedWatch tool puts the odds at nearly 100%. Before that, two key inflation updates—the Producer Price Index on Wednesday and the Consumer Price Index on Thursday—will give investors a clearer picture of the economy’s strength.

While September is historically a tricky month for stocks, the sentiment looks cautiously optimistic now. That said, chasing momentum feels risky—which is why a value-investing approach makes more sense now. This strategy is focused on finding stocks that are trading for less than what they’re actually worth, based on a company’s true financial strength and potential. 

Stocks like Halozyme Therapeutics, Inc. HALO, Par Pacific Holdings PARR, Popular, Inc. BPOP, PHINIA Inc. PHIN and KT Corporation KT display high earnings yield and are good choices for value investors.

Earnings Yield Strength

To identify these undervalued opportunities, investors often use metrics like the price-to-earnings (P/E) ratio. However, another helpful tool is earnings yield, which is calculated by dividing a company’s earnings per share (EPS) by its stock price. This tells you how much earnings you're getting for each dollar invested. A higher earnings yield generally signals a stock is undervalued, while a lower yield may suggest it’s overpriced.

Earnings yield metric is essentially the flip side of the P/E ratio but offers a unique advantage—it allows comparisons with bond yields, like the 10-year U.S. Treasury rate. If a stock’s earnings yield is higher than the Treasury yield, it may offer better returns than bonds and be a good buy. But if it’s lower, the stock might not be worth the risk.

By using earnings yield alongside other fundamentals, value investors can spot overlooked stocks with strong return potential and make informed decisions in a constantly changing market.

The Winning Strategy

We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:

Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.

Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.

Current Price greater than or equal to $5.

Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

Here we highlight five of the 56 stocks that qualified the screening:

Halozyme is a biopharmaceutical company focused on the development and commercialization of novel treatments for oncology indications by targeting the tumor microenvironment. The Zacks Consensus Estimate for HALO’s 2025 and 2026 earnings implies year-over-year growth of 46% and 22.5%, respectively. EPS estimates for the current and next year have moved up by 24 cents and 69 cents, respectively, over the past 30 days. Halozyme currently sports a Zacks Rank #1 and has a Value Score of B.

Par Pacific operates an integrated energy platform spanning refining, retail and logistics. The Zacks Consensus Estimate for PARR’s 2025 and 2026 earnings implies year-over-year growth of 395% and 108%, respectively. EPS estimates for the current and next year have moved up by 22 cents and 15 cents, respectively, over the past 30 days. Par Pacific currently sports a Zacks Rank #1 and has a Value Score of B.

Popular is a full-service financial services provider with operations in Puerto Rico, the U.S. mainland and the U.S. and British Virgin Islands. The Zacks Consensus Estimate for BPOP’s 2025 and 2026 earnings implies year-over-year growth of 26.3% and 12%, respectively. EPS estimates for the current and next year have moved up by 96 cents and 54 cents, respectively, over the past 60 days. Popular currently sports a Zacks Rank #1 and has a Value Score of B.

PHINIA designs fuel systems for traditional & hybrid vehicles, improving efficiency and cutting emissions, while its Aftermarket unit offers parts, tools and diagnostics to OEMs and service clients. The Zacks Consensus Estimate for PHIN’s 2025 and 2026 earnings implies year-over-year growth of 18% each. EPS estimates for the current and next year have moved up by 16 cents and 12 cents, respectively, over the past 30 days. PHINIA currently sports a Zacks Rank #1 and has a Value Score of A. 

KT Corp. is a telecom services company. Its offerings include mobile, fixed-line, broadband, VoIP, IT, and interconnection solutions. The Zacks Consensus Estimate for KT’s 2025 earnings implies year-over-year growth of 300%. EPS estimates for the current and next year have moved up by 16 cents and 12 cents, respectively, over the past 30 days. KT Corp. currently sports a Zacks Rank #1 and has a Value Score of A. 

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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This article originally published on Zacks Investment Research (zacks.com).

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