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2 high-yield stocks at rock-bottom prices I’d buy in 2020

The stock market achieved one of its best performances since the financial crisis last year. However, despite this performance, there are still plenty of bargains out there on the market, especially for income seekers.

With that in mind, here are two stocks that still appear to offer value and high dividend yields as well.

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Ukrainian iron ore producer Ferrexpo (LSE: FXPO) is a company the market loves to hate. Even though it has a strong track record of growing profits and returning cash to investors, the stock has always traded at a discount valuation. Some of this discount is warranted.

The company is still majority-owned by its founders, which means minority shareholders don’t get much of a say in how the business is run. That said, as Ferrexpo’s managers have more skin in the game than almost anyone else, they’re highly incentivised to produce the best returns for all shareholders.

As well as the above, the company is also suffering from reduced demand for iron ore pellets. The sluggish global economy weighed on demand last year, resulting in production falling from 10.6m tonnes in 2018 to 10.5m for 2019. To make things worse, global steel demand could fall by a further 0.6% in 2020.

Despite all of the above, shares in Ferrexpo look too cheap. The stock is currently dealing at a price-to-earnings (P/E) ratio of just 2.6, which suggests the stock offers a wide margin of safety at current levels. Further, the shares currently support a dividend yield of 11.3%, and the distribution to investors covered 3.4 times by earnings per share.

Genel Energy

As well as Ferrexpo, oil and gas group Genel Energy (LSE: GENL) appears to offer value at current levels. Investors seem to be concerned about this company’s long-term prospects. During the past few years, it has struggled to adapt to the current oil price environment. Conflict in its primary production region of Kurdistan has also hampered growth. 

Revenues hit $520m in 2014, but then plunged to $191m in 2016 before staging a recovery. Current forecasts suggest the business will record sales of $350m for 2019, and $330m for 2020. This will help the company generate a net profit of $129m in 2019, or $0.47 per share.

Based on these forecasts, the stock is trading at a P/E multiple of just 5.3. That’s around half of the market average, which suggests shares in Genel are undervalued at current levels.

Moreover, the stock currently bears a dividend yield of 5%. The distribution is covered more than three times by earnings per share. Therefore, it looks quite dependable for at least the next two years.

Looking at these figures, it seems as if now could be the time for investors to snap up a share in this recovering mid-cap oil business before the rest of the market wakes up to the value on offer.

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With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.