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5 Best Profitable Stocks to Buy Using Net Income Ratio

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Investors should use the concept of accounting ratios to assess a company’s profitability. After all, they always seek a profitable company over a loss-making one. They also look for companies that offer sturdy returns even after meeting all operating and non-operating costs.

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, Group Limited (TCOM - Free Report) , Medpace (MEDP - Free Report) , Centrus Energy (LEU - Free Report) , Suzano (SUZ - Free Report) and NVIDIA (NVDA - 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 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.

Screening Parameters

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: A 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 the universe of more than 7,685 stocks to only nine.

Here are five of the nine stocks that qualified for the screening: Group is a one-stop travel service company. The 12-month net profit margin of TCOM is 22.4%.

Medpace is a scientifically-driven, global, full-service clinical contract research organization. The 12-month net profit margin of MEDP is 15%.

Centrus Energy supplies enriched uranium fuel for commercial nuclear power plants. The 12-month net profit margin of LEU is 26.4%.

Suzano is a producer of eucalyptus pulp as well as paper producers. The 12-month net profit margin of SUZ is 38.4%.

NVIDIA is the worldwide leader in visual computing technologies. The 12-month net profit margin of NVDA is 48.9%.

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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:

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