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Improve Your Portfolio Amid Fall Volatility with this ROE Stock Screener

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Stocks slumped during the second session of the week, with the S&P 500 down 2% and the Nasdaq 2.8% lower. Tuesday’s steep drop comes as Wall Street attempts to determine the Federal Reserve’s next moves.

The Fed signaled last week that it could start to slowly reverse its bond buying program as soon as November. Meanwhile, the central bank said it might begin to lift interest rates by next year. With this in mind, bond yields continued their recent run higher. The 10-year U.S. Treasury hovers near three-month highs at around 1.52%, up from the 1.18% it touched in early August.

Some analysts are worried the U.S. economic comeback may have already peaked, while others point to slowing earnings revisions, rising prices, and global supply chain setbacks as reasons for caution. The market could remain volatile as we head into the fourth quarter and into 2022.

Luckily, interest rates will likely continue to favor stocks. For instance, the 10-year U.S. Treasury yield has rarely and barely moved above 3% in the last decade. And with higher than 2% inflation, Wall Street will keep chasing returns in equities.

The market was also due for a healthy pullback or even a correction. And the overall S&P 500 earnings and margins picture for 2022 and 2023 remains strong.

Therefore, investors with long-term horizons should try to stay constantly exposed to the market.Today we look at how to find highly-ranked stocks that have proven they can turn assets into profits amid the volatility…


Return on Equity or ROE helps investors understand if a firm’s executives are creating assets with investors’ cash or burning it. ROE shows a company’s ability to turn assets into profits. Put another way, this vital metric measures the profits made for each dollar of shareholder equity.

ROE is calculated as net income / shareholder's equity. For example: if $0.10 of assets are created for each $1 of shareholder equity that would equal a ROE of 10%.

Overall, Return on Equity is a great item to use regardless of what type of investor you are since it provides insight into management’s ability to create value and keep costs under control. Plus, if ROE slips, it can alert us to potential problems.

With all that said, let’s take a look at this screen’s parameters and see the companies proving they can return value to shareholders instead of churning through their cash…

• Zacks Rank equal to 1

The Zacks Rank looks at upward earnings estimate revisions, among other metrics, in order to find companies that are projected to see their earnings get stronger. In fact, beginning with a Zacks Rank #1 can be a great starting point because it boasts an average annual return of over 25% per year during the last 30 years.

• Price greater than or equal to 5

Today we ruled out any stocks that are trading for less than $5 a share because they can be more volatile and speculative.

• Price/Sales Ratio less than or equal to 1

On top of that, we are looking for a low price to sales ratio. Today we went with 1 or below as this range is usually thought to provide better value since investors pay less for each unit of sales.

• % (Broker) Rating Strong Buy equal to 100 (%)

In this screen, we decided to go with companies that brokers are fully on board with since ratings are typically skewed strongly toward ‘buy’ and ‘strong buy.’

• ROE greater than or equal to 10

Lastly, but most importantly for today’s screen, we got rid of any companies with Return on Equity of less than 10 because the median ROE value for all of the stocks in the Zacks Universe is under 10.

Here are three stocks that made it through today’s screen…

Citi Trends, Inc. (CTRN - Free Report)

M/I Homes, Inc. (MHO - Free Report)

Titan Machinery Inc. (TITN - Free Report)

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

Click here to sign up for a free trial to the Research Wizard today.

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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:

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Citi Trends, Inc. (CTRN) - free report >>

Titan Machinery Inc. (TITN) - free report >>

MI Homes, Inc. (MHO) - free report >>

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