CHICAGO, Jan. 15, 2014 /PRNewswire/ -- Stocks in this week's article include: Actavis (NYSE: ACT - Free Report), Aspen Insurance (NYSE: AHL - Free Report), Aegean Marine (NYSE: ANW - Free Report), Trinity Industries (NYSE: TRN - Free Report) and United Rentals (NYSE: URI - Free Report). Kevin Matras talks about a stock's earnings yield and how to use it.

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Screen of the Week written by Kevin Matras of Zacks Investment Research:

A stock's Earnings Yield measures just that, the anticipated yield (or return) an investment in a stock could give you based on the earnings and the price paid for the stock.

The most common way people will use this ratio is to compare it to other stocks and to compare the yields to the 10 Year T-Bill.

Conventional wisdom has it that if the yield on the stock market (S&P 500 for example) is lower than the yield on the 10 Year Treasury, then stocks might be considered overvalued. If the yield on the S&P 500 is greater than the 10 Year T-Bill, stocks would be considered undervalued.

The theory behind this is that Bonds and Stocks are competing for investors' dollars. And to attract investment interest in stocks, a higher yield needs to be paid to the stock investor for the extra risk he's assuming compared to the virtual risk-free investment offered in US backed Treasuries.

If earnings go up, the yield goes up. If earnings go down, so does the yield.

Prices also affect the yield, but they move inversely. If Prices go up, the yield goes down. And if prices go down, the yield goes up.

Currently, the earnings yield for the S&P is 6.35%, compared to the 10 Year Treasury of 2.84%. So stocks are still the more attractive investment, assuming you're ok with the risk that comes along with it.

The screen I'm running today looks for the following:

For the rest of this Screen of the Week article please visit Zacks.com at: http://www.zacks.com/commentary/30849/

Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don't wait for the market to get better before you decide to do better. Start learning how to be a better trader today: http://at.zacks.com/?id=111

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on ACT -FREE

Get the full Report on AHL - FREE

Get the full Report on ANW - FREE

Get the full Report on TRN - FREE

Get the full Report on URI - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Contact: Jim Giaquinto

Company: Zacks.com

Phone: 312-265-9268

Email: pr@zacks.com

Visit: www.Zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.