For Immediate Release
Chicago, IL –July 27, 2017 - Stocks in this week’s article include Farmers & Merchants Bancorp Inc (NASDAQ:FMAO – Free Report), Advanced Energy Industries, Inc. (NASDAQ:AEIS – Free Report), NVR, Inc. (NYSE:NVR – Free Report), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX – Free Report) and Sanderson Farms, Inc. (NASDAQ:SAFM – Free Report).
5 Top Efficient Stocks to Buy for a Winning Portfolio
Efficiency, the ability to transform inputs into outputs, is a potential indicator of a company’s financial health. Companies with favorable efficiency levels are likely to be on investors’ radar irrespective of market conditions. This is because a company with a favorable efficiency level is expected to provide impressive returns as it is believed to be positively correlated with its price performance.
Ratios to Evaluate Efficiency Levels
We have considered four popular ratios in order to find efficient companies that have the potential to provide impressive returns.
Inventory Turnover
Inventory level is one of the key indicators of a company’s business health. While a high inventory level may indicate that the company is going through a rough patch in terms of sales, a dwindling level may indicate that the company will run out of stock in a favorable sales condition. This is where inventory turnover comes into play. It is the ratio of 12-month cost of goods sold (COGS) to a 4-quarter average inventory. Thus, a high value of the ratio indicates a low level of inventory relative to COGS, while a low ratio signals that the company has excess inventory.
Receivables Turnover
This ratio is used to measure a company’s capability to extend its credit and collect debts on the basis of that credit. The receivables turnover ratio or the “accounts receivable turnover ratio” or the “debtor’s turnover ratio” is calculated by dividing 12-month sales by four-quarter average receivables. While a high ratio may indicate that the company efficiently collects its accounts receivables or has quality customers, a low ratio may signal that the company has an inefficient collection procedure or has low-quality customers or an inefficient credit policy.
Asset Utilization
This is a widely used measure of a company’s efficiency. Asset utilization indicates a company’s potential to utilize its assets. It is the ratio of total sales over the past 12 months to the last 4-quarter average of total assets. So, the higher the ratio, the greater is the possibility that the company is utilizing its assets efficiently. On the contrary, a low value of the ratio may signal that it is failing to use its assets effectively.
Operating Margin
Another popular efficiency ratio is operating margin. Operating profit margin, which is simply operating income over the past 12 months divided by sales over the same period, indicates how well a company is controlling its operating expenses. If a company has a high operating profit margin in relation to its competitors, it is doing a better job at controlling operating expenses.
All these ratios can be considered as effective measures if one compares different companies within a particular sector or industry. This is the reason why we have considered only those companies that have ratios higher than their respective industry averages.
Screening Parameters
In addition to the above-mentioned ratios, we have added a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) – to the screen with an objective to make this strategy more profitable.
Inventory Turnover, Receivables Turnover, Asset Utilization and Operating Margin greater than industry average: Higher value of these ratios than the industry averages may indicate that the efficiency level of the company is greater than its peers.
The use of these criteria has narrowed down the universe of around 7,887 stocks to only 18. Here are the top five stocks:
Farmers & Merchants Bancorp Inc(NASDAQ:FMAO – Free Report) operates as a bank holding company for The Farmers & Merchants State Bank that provides commercial banking, retail banking, and other financial services to individuals and small businesses in northwest Ohio and northeast Indiana. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 7.47%.
Advanced Energy Industries, Inc.(NASDAQ:AEIS – Free Report) is a provider of engineered, precision power conversion, measurement and control solutions. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 10.46%.
NVR, Inc.(NYSE:NVR – Free Report) is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 14.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vertex Pharmaceuticals Incorporated(NASDAQ:VRTX – Free Report) is engaged in discovering, developing, manufacturing and commercializing medicines for serious diseases. This Zacks Rank #1 company has an average four-quarter positive earnings surprise of 406.25%.
Sanderson Farms, Inc.(NASDAQ:SAFM – Free Report) is a poultry processing company. The company is engaged in the production, processing, marketing and distribution of fresh and frozen chicken, and also preparation, processing, marketing and distribution of processed and minimally prepared chicken. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 8.53%.
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.
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.
Get the full Report on FMAO - FREE
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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/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights: Farmers & Merchants Bancorp, Advanced Energy Industries, NVR, Vertex Pharmaceuticals and Sanderson Farms
For Immediate Release
Chicago, IL –July 27, 2017 - Stocks in this week’s article include Farmers & Merchants Bancorp Inc (NASDAQ:FMAO – Free Report), Advanced Energy Industries, Inc. (NASDAQ:AEIS – Free Report), NVR, Inc. (NYSE:NVR – Free Report), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX – Free Report) and Sanderson Farms, Inc. (NASDAQ:SAFM – Free Report).
5 Top Efficient Stocks to Buy for a Winning Portfolio
Efficiency, the ability to transform inputs into outputs, is a potential indicator of a company’s financial health. Companies with favorable efficiency levels are likely to be on investors’ radar irrespective of market conditions. This is because a company with a favorable efficiency level is expected to provide impressive returns as it is believed to be positively correlated with its price performance.
Ratios to Evaluate Efficiency Levels
We have considered four popular ratios in order to find efficient companies that have the potential to provide impressive returns.
Inventory Turnover
Inventory level is one of the key indicators of a company’s business health. While a high inventory level may indicate that the company is going through a rough patch in terms of sales, a dwindling level may indicate that the company will run out of stock in a favorable sales condition. This is where inventory turnover comes into play. It is the ratio of 12-month cost of goods sold (COGS) to a 4-quarter average inventory. Thus, a high value of the ratio indicates a low level of inventory relative to COGS, while a low ratio signals that the company has excess inventory.
Receivables Turnover
This ratio is used to measure a company’s capability to extend its credit and collect debts on the basis of that credit. The receivables turnover ratio or the “accounts receivable turnover ratio” or the “debtor’s turnover ratio” is calculated by dividing 12-month sales by four-quarter average receivables. While a high ratio may indicate that the company efficiently collects its accounts receivables or has quality customers, a low ratio may signal that the company has an inefficient collection procedure or has low-quality customers or an inefficient credit policy.
Asset Utilization
This is a widely used measure of a company’s efficiency. Asset utilization indicates a company’s potential to utilize its assets. It is the ratio of total sales over the past 12 months to the last 4-quarter average of total assets. So, the higher the ratio, the greater is the possibility that the company is utilizing its assets efficiently. On the contrary, a low value of the ratio may signal that it is failing to use its assets effectively.
Operating Margin
Another popular efficiency ratio is operating margin. Operating profit margin, which is simply operating income over the past 12 months divided by sales over the same period, indicates how well a company is controlling its operating expenses. If a company has a high operating profit margin in relation to its competitors, it is doing a better job at controlling operating expenses.
All these ratios can be considered as effective measures if one compares different companies within a particular sector or industry. This is the reason why we have considered only those companies that have ratios higher than their respective industry averages.
Screening Parameters
In addition to the above-mentioned ratios, we have added a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) – to the screen with an objective to make this strategy more profitable.
Inventory Turnover, Receivables Turnover, Asset Utilization and Operating Margin greater than industry average: Higher value of these ratios than the industry averages may indicate that the efficiency level of the company is greater than its peers.
The use of these criteria has narrowed down the universe of around 7,887 stocks to only 18. Here are the top five stocks:
Farmers & Merchants Bancorp Inc(NASDAQ:FMAO – Free Report) operates as a bank holding company for The Farmers & Merchants State Bank that provides commercial banking, retail banking, and other financial services to individuals and small businesses in northwest Ohio and northeast Indiana. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 7.47%.
Advanced Energy Industries, Inc.(NASDAQ:AEIS – Free Report) is a provider of engineered, precision power conversion, measurement and control solutions. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 10.46%.
NVR, Inc.(NYSE:NVR – Free Report) is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 14.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vertex Pharmaceuticals Incorporated(NASDAQ:VRTX – Free Report) is engaged in discovering, developing, manufacturing and commercializing medicines for serious diseases. This Zacks Rank #1 company has an average four-quarter positive earnings surprise of 406.25%.
Sanderson Farms, Inc.(NASDAQ:SAFM – Free Report) is a poultry processing company. The company is engaged in the production, processing, marketing and distribution of fresh and frozen chicken, and also preparation, processing, marketing and distribution of processed and minimally prepared chicken. This Zacks Rank #2 company has an average four-quarter positive earnings surprise of 8.53%.
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.
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.
Get the full Report on FMAO - FREE
Get the full Report on AEIS - FREE
Get the full Report on NVR - FREE
Get the full Report on VRTX - FREE
Get the full Report on SAFM - FREE
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/performancefor information about the performance numbers displayed in this press release.