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3 Top-Ranked Profitable Stocks to Invest in Using Net Income Ratio
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Investors should look for companies that offer sturdy returns after meeting all operating and non-operating costs. In other words, investors should seek a profitable company over a loss-making one. Thus, we have used the concept of accounting ratios to evaluate a company’s profitability.
There are several profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine the bottom-line performance of a company.
To that end, Aercap (AER - Free Report) , InterDigital (IDCC - Free Report) , and Alpha Metallurgical Resources (AMR - Free Report) have been selected as the top picks with a high net income ratio.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenues. Using net income ratio, one can determine a company’s effectiveness to meet 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.
Screening Parameters
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 18.
Here are three of the 18 stocks that qualified for the screening:
Aercap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. The 12-month net profit margin of AER is 24.1%.
InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The 12-month net profit margin of IDCC is 32.4%.
Alpha Metallurgical Resources is a mining company with operations principally in Virginia and West Virginia. The 12-month net profit margin of AMR is 33.5%.
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.
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3 Top-Ranked Profitable Stocks to Invest in Using Net Income Ratio
Investors should look for companies that offer sturdy returns after meeting all operating and non-operating costs. In other words, investors should seek a profitable company over a loss-making one. Thus, we have used the concept of accounting ratios to evaluate a company’s profitability.
There are several profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine the bottom-line performance of a company.
To that end, Aercap (AER - Free Report) , InterDigital (IDCC - Free Report) , and Alpha Metallurgical Resources (AMR - Free Report) have been selected as the top picks with a high net income ratio.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenues. Using net income ratio, one can determine a company’s effectiveness to meet 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.
Screening Parameters
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 18.
Here are three of the 18 stocks that qualified for the screening:
Aercap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. The 12-month net profit margin of AER is 24.1%.
InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The 12-month net profit margin of IDCC is 32.4%.
Alpha Metallurgical Resources is a mining company with operations principally in Virginia and West Virginia. The 12-month net profit margin of AMR is 33.5%.
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.
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.