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5 High ROE Stocks to Buy as China Covid Deaths Spark Concern
The U.S. equity markets declined in the past few trading sessions as fresh Covid-19 deaths in China sparked concerns regarding the resumption of market restrictions and strict measures to curb the spread of the infection. This put the brakes on a short-term rally witnessed in the past week driven by better-than-expected inflation data, which showed that the producer price index rose 0.2% in October against broad-based expectations of a 0.4% increase. However, the recent decline dented the hopes of a speedy recovery in the global economy and put the markets on tenterhooks.
Meanwhile, investors await the release of the minutes from the Fed's November meeting for definite cues to the future rate hike program and its likely impact on the economy. With the fourth successive 75 basis point increase, the Fed has vowed to continue its aggressive rate hike policy to curb high inflationary pressure, which is yet to recede from its near 40-year highs, fueling speculations that more interest rate hikes are in the pipeline.
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. Jabil Inc., Ryder System, Inc., AGNC Investment Corp., CNH Industrial N.V. and Equinor ASA are some of the stocks with high ROE to profit from.
ROE: A Key Metric
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 eight stocks that qualified the screen:
Jabil: Headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
It delivered a trailing four-quarter earnings surprise of 9.3%, on average, and has a long-term earnings growth expectation of 12%. Currently, Jabil sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Ryder System: Florida-based Ryder System is recognized as one of the world's largest providers of integrated logistics and transportation solutions. It serves a variety of industries, the most significant of which are automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing.
The company delivered a trailing four-quarter earnings surprise of 30.1%, on average. Ryder System carries a Zacks Rank #2.
AGNC Investment: Previously known as American Capital Agency Corp., AGNC Investment is a real estate investment trust focused on leveraged investments in Agency residential mortgage-backed securities. That includes residential mortgage pass-through securities and collateralized mortgage obligations.
AGNC Investment adheres to an active portfolio-management policy, which includes re-evaluation and adjustment of its portfolio and hedges amid a varying interest rate and mortgage market environment. The company delivered a trailing four-quarter earnings surprise of 22.1%, on average. AGNC Investment sports a Zacks Rank #1.
CNH Industrial: Headquartered in London, the United Kingdom, CNH Industrial is one of the leading equipment and services companies engaged in the manufacture and sale of agricultural and construction equipment. Currently, CNH Industrial has a commercial presence in approximately 180 countries.
The company delivered a trailing four-quarter earnings surprise of 18.9%, on average. CNH Industrial sports a Zacks Rank #1.
Equinor: Headquartered in Stavanger, Norway, Equinor is one of the premier integrated energy companies in the world, with operations spreading across 30 countries. In Europe, the company is the second-largest supplier of natural gas. Equinor is also a leading seller of crude oil.
Equinor delivered a trailing four-quarter earnings surprise of 10.2%, on average. It sports a Zacks Rank #1.
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/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
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Zacks.com featured highlights include Jabil, Ryder System, AGNC Investment, CNH Industrial and Equinor ASA
For Immediate Release
Chicago, IL – November 23, 2022 – Stocks in this week’s article are Jabil Inc. (JBL - Free Report) , Ryder System, Inc. (R - Free Report) , AGNC Investment Corp. (AGNC - Free Report) , CNH Industrial N.V. (CNHI - Free Report) and Equinor ASA (EQNR - Free Report) .
5 High ROE Stocks to Buy as China Covid Deaths Spark Concern
The U.S. equity markets declined in the past few trading sessions as fresh Covid-19 deaths in China sparked concerns regarding the resumption of market restrictions and strict measures to curb the spread of the infection. This put the brakes on a short-term rally witnessed in the past week driven by better-than-expected inflation data, which showed that the producer price index rose 0.2% in October against broad-based expectations of a 0.4% increase. However, the recent decline dented the hopes of a speedy recovery in the global economy and put the markets on tenterhooks.
Meanwhile, investors await the release of the minutes from the Fed's November meeting for definite cues to the future rate hike program and its likely impact on the economy. With the fourth successive 75 basis point increase, the Fed has vowed to continue its aggressive rate hike policy to curb high inflationary pressure, which is yet to recede from its near 40-year highs, fueling speculations that more interest rate hikes are in the pipeline.
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. Jabil Inc., Ryder System, Inc., AGNC Investment Corp., CNH Industrial N.V. and Equinor ASA are some of the stocks with high ROE to profit from.
ROE: A Key Metric
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 eight stocks that qualified the screen:
Jabil: Headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
It delivered a trailing four-quarter earnings surprise of 9.3%, on average, and has a long-term earnings growth expectation of 12%. Currently, Jabil sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Ryder System: Florida-based Ryder System is recognized as one of the world's largest providers of integrated logistics and transportation solutions. It serves a variety of industries, the most significant of which are automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing.
The company delivered a trailing four-quarter earnings surprise of 30.1%, on average. Ryder System carries a Zacks Rank #2.
AGNC Investment: Previously known as American Capital Agency Corp., AGNC Investment is a real estate investment trust focused on leveraged investments in Agency residential mortgage-backed securities. That includes residential mortgage pass-through securities and collateralized mortgage obligations.
AGNC Investment adheres to an active portfolio-management policy, which includes re-evaluation and adjustment of its portfolio and hedges amid a varying interest rate and mortgage market environment. The company delivered a trailing four-quarter earnings surprise of 22.1%, on average. AGNC Investment sports a Zacks Rank #1.
CNH Industrial: Headquartered in London, the United Kingdom, CNH Industrial is one of the leading equipment and services companies engaged in the manufacture and sale of agricultural and construction equipment. Currently, CNH Industrial has a commercial presence in approximately 180 countries.
The company delivered a trailing four-quarter earnings surprise of 18.9%, on average. CNH Industrial sports a Zacks Rank #1.
Equinor: Headquartered in Stavanger, Norway, Equinor is one of the premier integrated energy companies in the world, with operations spreading across 30 countries. In Europe, the company is the second-largest supplier of natural gas. Equinor is also a leading seller of crude oil.
Equinor delivered a trailing four-quarter earnings surprise of 10.2%, on average. It sports a Zacks Rank #1.
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/2020764/5-high-roe-stocks-to-buy-as-china-covid-deaths-spark-concern.
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/performancefor information about the performance numbers displayed in this press release.