Back to top

Zacks.com featured highlights: Copart, Tallgrass Energy GP, Vishay Intertechnology, W.R. Grace and SurModics

Read MoreHide Full Article

For Immediate Release

Chicago, IL – June 30, 2016 - Stocks in this week’s article include: Copart, Inc. (CPRT - Free Report) , Tallgrass Energy GP, LP , Vishay Intertechnology Inc. (VSH - Free Report) , W.R. Grace & Co. (GRA - Free Report) and SurModics, Inc. (SRDX - Free Report) .

Screen of the Week of Zacks Investment Research:

Invest in These 5 Efficient Stocks for Healthy Returns

An investment strategy based on the efficiency level of a company is likely to lead to healthy returns across all market conditions. Efficiency is a measure of a company’s potential to convert its available input into output. Different studies have shown that there is a direct relationship between a company’s efficiency level and its price movement. So, investing in efficient companies may prove profitable.

Key Efficiency Ratios

Sometimes it becomes difficult to measure the efficiency level of a company. This is the reason why one must consider popular efficiency ratios to select potential stocks in order to build a profitable portfolio. These efficiency ratios are:

Inventory Turnover: The ratio of 12-month cost of goods sold (COGS) to a 4-quarter average inventory, is considered as one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value may indicate that the company has a relatively low level of inventory compared to COGS, a low value will indicate that the company is suffering from weak sales, which led to excess inventory.

Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or the “debtor’s turnover ratio” is desirable as it signals that the company is capable of collecting its accounts receivables or that it has quality customers.

Asset Utilization: This ratio indicates a company’s capability to convert its assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last 4-quarter average of total assets. Like the above two ratios, high asset utilization may also indicate that a company is efficient.

Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control its operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.

As efficiency level varies across different industries, it is best to select those stocks that have higher ratios compared to their industries. Along with higher ratios, we have considered only those stocks that have either a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) in order to make the strategy more profitable.

Screening Parameters

Inventory Turnover, Receivables Turnover, Asset Utilization and Operating Margin greater than industry average: The values of these ratios higher than industry averages may indicate that the efficiency level of the company is higher than its peers.

Zacks Rank less than or equal to #2 : Only Strong Buy and Buy rated stocks can get through.

The use of these very few criteria has narrowed down the universe of over 7,700stocks to only 19.

Here are five stocks from the 19 that made it through the screen:

Copart, Inc. (CPRT) provides a full range of services to process and sell salvage vehicles through auctions, principally to licensed dismantlers, rebuilders and used vehicle dealers. Copart also has an average four-quarter positive earnings surprise of 9%.

Tallgrass Energy GP, LP (TEGP) is engaged in the transportation, storage and processing of natural gas, transportation of crude oil and provision of water business services. This Zacks Rank #1 company has an average four-quarter positive earnings surprise of 82.6%.

Vishay Intertechnology Inc. (VSH) is a leading international manufacturer and supplier of discrete passive electronic components and discrete active electronic components. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 16%.

W.R. Grace & Co. (GRA) produces specialty chemicals. It primarily operates through two business segments, namely Davison Chemicals and Performance Chemicals. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 6.7%.

SurModics, Inc. (SRDX) is a leading provider of surface modification technologies to healthcare domain throughout the globe. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 95%.

While backtesting over a two-year timeframe (June 13, 2014 to June 10, 2016), considering a four-week holding period, a portfolio following this strategy provided a total return of 15% compared with the S&P 500’s return of 6.9%. Thus this strategy may prove to be profitable for investors seeking healthy returns.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.

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 .

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Follow us on Twitter: https://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/performance

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/performance for information about the performance numbers displayed in this press release.

Published in