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Top 5 Stocks With High ROE to Buy as Recession Fears Rise
Despite a healthy start to the June-quarter earnings that triggered a short-term rally, the markets witnessed intense volatility in the past few trading sessions as Walmart cut its earnings forecast on rising food inflation. This created a ripple effect on the broader equity market, and stocks mostly trended down across sectors. As the high inflationary pressure refuses to abate, the Fed is likely to continue with its aggressive rate hike policy. It is widely expected to announce another 75-basis point hike in its latest policy meeting. The Fed aims to enforce similar increases in the remainder of the year to restore price stability.
Investors also await clarity regarding the future interest rate path and its likely impact on the stock market. The central bank had earlier offered a broad outline of its reduction in asset holdings for monetary tightening. The Fed intends to reduce Treasury holdings and mortgage-backed securities by $30 billion and $17.5 billion, respectively, from June and extend the tallies to $65 billion and $35 billion after three months. Despite these initiatives, experts remain highly anxious about a probable recession later this year and aim to look for cues about the U.S. economy from the Fed policy meeting details.
As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they can benefit from ‘cash cow’ stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Marriott International, Inc., NetApp, Inc., Jabil Inc., Matson, Inc. and United States Steel Corporation are some of the stocks with high ROE to profit.
Why ROE?
ROE = Net Income/Shareholders’ Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry — the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management’s efficiency in rewarding shareholders with attractive risk-adjusted returns.
Here are five of the 18 stocks that qualified the screen:
Marriott International, Inc.: Headquartered in Bethesda, MD, Marriott is a leading worldwide hospitality company focused on lodging management and franchising. It boasts a portfolio of more than 8,000 properties under 30 leading brands spanning 139 countries and territories.
NetApp, Inc.: NetApp provides enterprise storage, data management software and hardware products and services. The Sunnyvale, CA-based company’s product line comprises two storage platforms - FAS storage platform and E-Series platform.
The company has a long-term earnings growth expectation of 8.8% and delivered a trailing four-quarter earnings surprise of 12.6%, on average. NetApp carries a Zacks Rank #2.
Jabil Inc.: Headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, production, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
Jabil carries a Zacks Rank #2. The company has a long-term earnings growth expectation of 12%. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Matson, Inc.: Headquartered in Honolulu, Hawaii, Matson offers ocean transportation and logistics services to the U.S. military, freight forwarders, retailers, consumer goods, automobile manufacturers and other customers. The company provides a vital lifeline to the domestic non-contiguous economies of Hawaii, Alaska and Guam and other island economies in Micronesia.
This Zacks #2 Ranked company delivered a trailing four-quarter earnings surprise of 2.1%, on average. Matson’s fleet of owned and chartered vessels includes containerships, combination containers and custom-designed barges.
United States Steel Corporation: Pittsburgh, PA-based United States Steel Corp. is a leading steel manufacturer in the United States and the fifth largest in the world. It produces and sells steel mill products – including flat-rolled and tubular products – in North America and Europe.
U.S. Steel is actively engaged in improving its cost structure and operations through actions such as the shutdown of operations, manufacturing process/logistics improvements and savings on selling, and general and administrative expenses. U.S. Steel carries a Zacks Rank #2.
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.
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Marriott, NetApp, Jabil, Matson and United States Steel
For Immediate Release
Chicago, IL – July 28, 2022 – Stocks in this week’s article are Marriott International, Inc. (MAR - Free Report) , NetApp, Inc. (NTAP - Free Report) , Jabil Inc. (JBL - Free Report) , Matson, Inc. (MATX - Free Report) and United States Steel Corporation (X - Free Report) .
Top 5 Stocks With High ROE to Buy as Recession Fears Rise
Despite a healthy start to the June-quarter earnings that triggered a short-term rally, the markets witnessed intense volatility in the past few trading sessions as Walmart cut its earnings forecast on rising food inflation. This created a ripple effect on the broader equity market, and stocks mostly trended down across sectors. As the high inflationary pressure refuses to abate, the Fed is likely to continue with its aggressive rate hike policy. It is widely expected to announce another 75-basis point hike in its latest policy meeting. The Fed aims to enforce similar increases in the remainder of the year to restore price stability.
Investors also await clarity regarding the future interest rate path and its likely impact on the stock market. The central bank had earlier offered a broad outline of its reduction in asset holdings for monetary tightening. The Fed intends to reduce Treasury holdings and mortgage-backed securities by $30 billion and $17.5 billion, respectively, from June and extend the tallies to $65 billion and $35 billion after three months. Despite these initiatives, experts remain highly anxious about a probable recession later this year and aim to look for cues about the U.S. economy from the Fed policy meeting details.
As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they can benefit from ‘cash cow’ stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Marriott International, Inc., NetApp, Inc., Jabil Inc., Matson, Inc. and United States Steel Corporation are some of the stocks with high ROE to profit.
Why ROE?
ROE = Net Income/Shareholders’ Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry — the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management’s efficiency in rewarding shareholders with attractive risk-adjusted returns.
Here are five of the 18 stocks that qualified the screen:
Marriott International, Inc.: Headquartered in Bethesda, MD, Marriott is a leading worldwide hospitality company focused on lodging management and franchising. It boasts a portfolio of more than 8,000 properties under 30 leading brands spanning 139 countries and territories.
Marriott delivered a trailing four-quarter earnings surprise of 36.2%, on average. It has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
NetApp, Inc.: NetApp provides enterprise storage, data management software and hardware products and services. The Sunnyvale, CA-based company’s product line comprises two storage platforms - FAS storage platform and E-Series platform.
The company has a long-term earnings growth expectation of 8.8% and delivered a trailing four-quarter earnings surprise of 12.6%, on average. NetApp carries a Zacks Rank #2.
Jabil Inc.: Headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, production, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
Jabil carries a Zacks Rank #2. The company has a long-term earnings growth expectation of 12%. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Matson, Inc.: Headquartered in Honolulu, Hawaii, Matson offers ocean transportation and logistics services to the U.S. military, freight forwarders, retailers, consumer goods, automobile manufacturers and other customers. The company provides a vital lifeline to the domestic non-contiguous economies of Hawaii, Alaska and Guam and other island economies in Micronesia.
This Zacks #2 Ranked company delivered a trailing four-quarter earnings surprise of 2.1%, on average. Matson’s fleet of owned and chartered vessels includes containerships, combination containers and custom-designed barges.
United States Steel Corporation: Pittsburgh, PA-based United States Steel Corp. is a leading steel manufacturer in the United States and the fifth largest in the world. It produces and sells steel mill products – including flat-rolled and tubular products – in North America and Europe.
U.S. Steel is actively engaged in improving its cost structure and operations through actions such as the shutdown of operations, manufacturing process/logistics improvements and savings on selling, and general and administrative expenses. U.S. Steel carries a Zacks Rank #2.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1958426/top-5-stocks-with-high-roe-to-buy-as-recession-fears-rise
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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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: https://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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.