5 Value Picks to Ride Out US-China Trade Rift & Government Shutdown

The U.S. market faces a turbulent week as multiple pressures collide — renewed U.S.-China trade tensions, an ongoing government shutdown and the kickoff of the third-quarter earnings season. U.S. President Trump’s warning of potential 100% tariffs on Chinese goods, in response to China’s rare earths policy, has reignited fears of a full-blown trade war.

At the same time, investors await key reports on inflation and jobs, along with remarks from Fed Chair Powell that could shape rate expectations. With geopolitical and policy uncertainties clouding the outlook, market volatility is running high.

In such an environment, value investing — focusing on fundamentally strong companies trading below intrinsic worth — seeks to navigate risks and identify long-term opportunities amid short-term market noise.

A useful metric for spotting attractive value opportunities is earnings yield. Stocks like Allied Gold Corporation AAUC, Micron Technology Inc. MU, Fortrea Holdings Inc. FTRE, StoneCo Ltd. STNE and HF Sinclair Corporation DINO make for good value picks displaying high earnings yield.

Understanding Earnings Yield Metric

Earnings yield, expressed in percentage, is calculated as annual earnings per share (EPS) divided by the 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 prevailing interest rates, such as the current 10-year Treasury yield, to understand 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.

Setting the Right Filters

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 48 stocks that qualified the screening:

Allied Gold:  This Canada-based gold producer has operations spread across Côte d’Ivoire, Mali and Ethiopia.The Zacks Consensus Estimate for AAUC’s 2025 and 2026 EPS suggests a year-over-year jump of 907% and 193%, respectively. Over the past 30 days, the estimates for 2025 and 2026 have moved north by 5 cents and 21 cents, respectively. Allied Gold sports a Zacks Rank #1 and has a Value Score of B.

Micron Technology: Based in Idaho, Micron is one of the leading worldwide providers of semiconductor memory solutions. The Zacks Consensus Estimate for MU’s fiscal 2026 and 2027 EPS calls for year-over-year growth of 100% and 12%, respectively. Over the past 30 days, the estimates for 2025 and 2026 have risen by $3.53 and $2.98, respectively. Micron Technology sports a Zacks Rank #1 and has a Value Score of B.

Fortrea Holdings: Based in North Carolina, the company is a provider of clinical development and patient access solutions to the life sciences industry. The Zacks Consensus Estimate for FTRE’s 2025 and 2026 EPS suggests a year-over-year increase of 63.6% and 64.5%, respectively. Over the past 30 days, the estimates for 2025 and 2026 have been revised upward by 3 cents and 2 cents, respectively. Fortrea Holdings sports a Zacks Rank #1 and has a Value Score of A.

StoneCo: This Brazilian fintech company provides payment, digital banking and credit solutions to merchants and partners across in-store, online and mobile channels. The Zacks Consensus Estimate for FTRE’s 2025 and 2026 EPS implies year-over-year growth of 20% and 17%, respectively. Over the past 30 days, the estimates for 2025 and 2026 have moved north by 8 cents each. StoneCo sports a Zacks Rank #1 and has a Value Score of B.

HF Sinclair: Based in Dallas, the company is a producer and marketer of gasoline, diesel fuel and other specialty products. The Zacks Consensus Estimate for FTRE’s 2025 and 2026 EPS suggests a year-over-year surge of 257.4% and 26.4%, respectively. Over the past 30 days, the estimates for 2025 and 2026 have headed north by 74 cents and 98 cents, respectively. HF Sinclair sports a Zacks Rank #1 and has a Value Score of B.

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.

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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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