We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bet on 5 Stocks with High ROE to Trounce Recession Fears
With the U.S. consumer price index rising 8.6% in May – the fastest rise since December 1981 – the odds of a recession later in 2022 have increased significantly, triggering intense volatility in the equity markets. As the high inflationary pressure refuses to abate, the Fed is continuing with its aggressive rate hike policy and raised the interest rate for the federal funds by 75 basis points to 1.50-1.75%. The Fed aims to enforce similar increases in the remainder of the year to restore price stability.
The central bank has also 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 anxious about high inflation data and aim to look for cues for probable recession from the upcoming new home sales data and the final University of Michigan consumer sentiment report for June.
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. Louisiana-Pacific Corp., The Coca-Cola Co., Qualcomm Inc., Matson, Inc. and Dillard's, Inc. are some of the stocks with high ROE to profit.
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 16 stocks that qualified the screen:
Louisiana-Pacific Corp.: Headquartered in Nashville, TN, Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products and exterior siding for use in residential, industrial and light commercial construction. The company's products are used primarily in new home construction, repair and remodeling and outdoor structures.
The Coca-Cola Co.: The Atlanta, GA-based Coca-Cola Company offers more than 4,700 beverage products (and more than 500 brands), spanning from sodas (or sparkling beverages) to energy drinks. In addition to its primary sparkling soft drinks (carbonated), the company sells a large range of still (non-carbonated) beverages, including water, enhanced water, juices and juice drinks, sports drinks, ready-to-drink teas and coffees and dairy and energy drinks.
The company has a long-term earnings growth expectation of 7% and delivered a trailing four-quarter earnings surprise of 13.6%, on average. Coca-Cola Company carries a Zacks Rank #2.
Qualcomm Inc.: Headquartered in San Diego, CA, Qualcomm designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. The products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications as well as global positioning system products. The company delivered a trailing four-quarter earnings surprise of 11.4%, on average.
Qualcomm carries a Zacks Rank #2. The company has a long-term earnings growth expectation of 16.3%. Qualcomm is well-positioned to benefit from solid 5G traction with greater visibility and a diversified revenue stream to meet its long-term revenue targets.
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.
Dillard's, Inc.: Founded in 1938, Dillard's is a large departmental store chain featuring fashion apparel and home furnishings. Its merchandise mix consists of both branded and private-label items. The company's strategy is to offer more fashion-forward and trendy products to attract customers.
Dillard's is benefiting from continued momentum in consumer demand and better inventory management. The company has a long-term earnings growth expectation of 14.6% and delivered a trailing four-quarter earnings surprise of 224.1%, on average. Dillard's 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
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks.com featured highlights include Louisiana-Pacific, Coca-Cola, Qualcomm, Matson and Dillard's
For Immediate Release
Chicago, IL – June 27, 2022 – Stocks in this week’s article areLouisiana-Pacific Corp. (LPX - Free Report) , The Coca-Cola Co. (KO - Free Report) , Qualcomm Inc. (QCOM - Free Report) , Matson, Inc. (MATX - Free Report) and Dillard's, Inc. (DDS - Free Report) .
Bet on 5 Stocks with High ROE to Trounce Recession Fears
With the U.S. consumer price index rising 8.6% in May – the fastest rise since December 1981 – the odds of a recession later in 2022 have increased significantly, triggering intense volatility in the equity markets. As the high inflationary pressure refuses to abate, the Fed is continuing with its aggressive rate hike policy and raised the interest rate for the federal funds by 75 basis points to 1.50-1.75%. The Fed aims to enforce similar increases in the remainder of the year to restore price stability.
The central bank has also 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 anxious about high inflation data and aim to look for cues for probable recession from the upcoming new home sales data and the final University of Michigan consumer sentiment report for June.
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. Louisiana-Pacific Corp., The Coca-Cola Co., Qualcomm Inc., Matson, Inc. and Dillard's, Inc. are some of the stocks with high ROE to profit.
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 16 stocks that qualified the screen:
Louisiana-Pacific Corp.: Headquartered in Nashville, TN, Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products and exterior siding for use in residential, industrial and light commercial construction. The company's products are used primarily in new home construction, repair and remodeling and outdoor structures.
Louisiana-Pacific delivered a trailing four-quarter earnings surprise of 14%, on average. It has a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
The Coca-Cola Co.: The Atlanta, GA-based Coca-Cola Company offers more than 4,700 beverage products (and more than 500 brands), spanning from sodas (or sparkling beverages) to energy drinks. In addition to its primary sparkling soft drinks (carbonated), the company sells a large range of still (non-carbonated) beverages, including water, enhanced water, juices and juice drinks, sports drinks, ready-to-drink teas and coffees and dairy and energy drinks.
The company has a long-term earnings growth expectation of 7% and delivered a trailing four-quarter earnings surprise of 13.6%, on average. Coca-Cola Company carries a Zacks Rank #2.
Qualcomm Inc.: Headquartered in San Diego, CA, Qualcomm designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. The products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications as well as global positioning system products. The company delivered a trailing four-quarter earnings surprise of 11.4%, on average.
Qualcomm carries a Zacks Rank #2. The company has a long-term earnings growth expectation of 16.3%. Qualcomm is well-positioned to benefit from solid 5G traction with greater visibility and a diversified revenue stream to meet its long-term revenue targets.
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.
Dillard's, Inc.: Founded in 1938, Dillard's is a large departmental store chain featuring fashion apparel and home furnishings. Its merchandise mix consists of both branded and private-label items. The company's strategy is to offer more fashion-forward and trendy products to attract customers.
Dillard's is benefiting from continued momentum in consumer demand and better inventory management. The company has a long-term earnings growth expectation of 14.6% and delivered a trailing four-quarter earnings surprise of 224.1%, on average. Dillard's 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/1943387/bet-on-5-stocks-with-high-roe-to-trounce-recession-fears
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 >>.
Follow us on Twitter: https://www.twitter.com/zacksresearch
Join us on Facebook: https://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: 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.