For Immediate Release
Chicago, IL – December 6, 2017 - Stocks in this week’s article Monsanto Company (MON - Free Report) , International Consolidated Airlines Group, S.A. (ICAGY - Free Report) , Microchip Technology Inc. (MCHP - Free Report) , CBRE Group, Inc. (CBG - Free Report) and Celanese Corporation (CE - Free Report) .
Markets Volatile on Senate Tax Deal: 5 Top ROE Picks
The Senate Republicans followed the footsteps of the House of Representatives and managed to pass the tax bill, inching closer to a legislative tax overhaul centered on President Trump’s electoral promise. With corporate taxes likely to come down from 35% to 20%, expectations of higher corporate earnings and dividend payouts are likely to drive stocks. However, the houses need to reconcile to craft a joint bill for it to become a law.
While Dow scaled a record high on the news, other markets closed relatively lower on tech sector woes. As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they could benefit from ‘cash cow’ stocks that garner higher returns.
However, singling out cash-rich stocks alone does not make for a solid investment proposition unless they are backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting its cash at a high rate of return.
ROE = Net Income/Shareholders’ Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify stocks that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry – the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management’s efficiency in rewarding shareholders with attractive risk-adjusted returns.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/284948/markets-volatile-on-senate-tax-bill-5-top-roe-picks
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