It’s crucial for investors to look for companies that offer sturdy returns after meeting all operating and non-operating costs. Hence, we have used the concept of accounting ratios to evaluate a company’s profitability. There are various profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine a company's bottom-line performance.
To that end,
Arcus Biosciences ( RCUS Quick Quote RCUS - Free Report) , Suzano ( SUZ Quick Quote SUZ - Free Report) and Arch Resources ( ARCH Quick Quote ARCH - Free Report) have been selected as the top picks with a high net income ratio. Net Income Ratio
The net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenues. Using the net income ratio, one can determine a company’s effectiveness in meeting operating and non-operating expenses from revenues. A higher net income ratio usually implies a company’s ability to generate ample revenues and successfully manage all business functions.
The net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank Equal to #1: Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here. Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well. Trailing 12-Month Net Income Ratio Higher than X Industry: High net income ratio indicates a company’s solid profitability. Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters have narrowed down the universe of more than 7,685 stocks to only 17.
Here are three of the 17 stocks that qualified for the screening:
Arcus Biosciences is a biopharmaceutical company. It focuses on creating innovative cancer immunotherapies. The 12-month net profit margin of RCUS is 18.4%. Suzano is a producer of eucalyptus pulp as well as paper producers. The 12-month net profit margin of SUZ is 38.6%. Arch Resources is one of the largest coal producers in the United States, operating nine mines across the major coal basins of the country. The 12-month net profit margin of ARCH is 29.6%.
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Click here to sign up for a free trial to the Research Wizard today. 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: https://www.zacks.com/performance.