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Buy 5 High ROE Stocks as Rate Hike Fears Keep Markets at Bay
After two back-to-back winning runs, the broader equity markets plunged sharply on Friday as a strong jobs report reignited fears of a probable interest rate hike in the impending Federal Reserve meeting later this month. The nonfarm payrolls report for August revealed that the U.S. economy added 162,000 jobs last month, outpacing the broad-based expectations of 53,000 job additions. In addition to a reversal of the summer slowdown in hiring, the unemployment rate held steady at 4.1%, portraying stable labor market conditions. This apparently pulled down equity markets, while bond yields surged.
Surging oil prices further strained the markets and increased concerns that elevated energy prices will drive inflation higher, leading to a likely rate hike. With a lasting peace agreement in the Middle East fading to oblivion, market uncertainty remained elevated. As investors employ a wait-and-see approach in a classic example of "backing and filling" in the market, they can benefit from "cash cow" stocks that garner higher returns.
However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios, such as return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. The Allstate Corp., Arista Networks, Inc., Ross Stores, Inc., Gartner, Inc. and Micron Technology, Inc. are some of the stocks with high ROE to profit from.
Why ROE?
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 companies 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.
Here are five of the 12 stocks that qualified the screening:
Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest property-casualty (P&C) insurer and the largest publicly held personal lines carrier in the United States. The company also provides a range of life insurance and investment products to its diverse customer base. It provides insurance products to approximately 16 million households through more than 12,000 exclusive agencies and financial specialists in the United States and Canada.
The company has a long-term earnings growth expectation of 12.5% and delivered a trailing four-quarter earnings surprise of 45.3%, on average. It has a VGM Score of A. Allstate sports a Zacks Rank #1 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Arista: Santa Clara, CA-based Arista is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company holds a leadership position in 100-gigabit Ethernet switching for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
The company has a long-term earnings growth expectation of 22.7%. It delivered a trailing four-quarter earnings surprise of 8.9%, on average. Arista sports a Zacks Rank #1.
Ross: Based in Dublin, CA, Ross is an off-price retailer of apparel and home accessories, offering in-season, branded and designer apparel, footwear, accessories and other home-related merchandise. Operating primarily in the United States, it targets middle-income households, keeping prices generally 20% to 60% below the regular prices of most department and specialty stores.
The company has a long-term earnings growth expectation of 14.6% and delivered a trailing four-quarter earnings surprise of 11.2%, on average. Ross carries a Zacks Rank #2 at present.
Gartner: Headquartered in Stamford, CT, Gartner is reportedly the world's leading information technology research and advisory firm. The company offers rich domain expertise and technology-related insight necessary for an informed decision-making process.
Gartner has a long-term earnings growth expectation of 20.1% and delivered a trailing four-quarter earnings surprise of 13.5%, on average. Gartner sports a Zacks Rank #1.
Micron: Headquartered in Idaho, Micron is one of the leading worldwide providers of semiconductor memory solutions. Through global brands, namely Micron, Crucial and Ballistix, it manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory, NAND flash memory, NOR Flash and other technologies. Its solutions are used in leading-edge computing, consumer, networking, mobile, automotive, industrial and data center products.
The company delivered a trailing four-quarter earnings surprise of 21.1%, on average. Micron carries a Zacks Rank #2 at present.
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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.
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.
View the Zacks #1 Rank List
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Zacks.com featured highlights include The Allstate, Arista Networks, Ross Stores, Gartner and Micron Technology
For Immediate Release
Chicago, IL – September 9, 2026 – Stocks in this week’s article are The Allstate Corp. (ALL - Free Report) , Arista Networks, Inc. (ANET - Free Report) , Ross Stores, Inc. (ROST - Free Report) , Gartner, Inc. (IT - Free Report) and Micron Technology, Inc. (MU - Free Report) .
Buy 5 High ROE Stocks as Rate Hike Fears Keep Markets at Bay
After two back-to-back winning runs, the broader equity markets plunged sharply on Friday as a strong jobs report reignited fears of a probable interest rate hike in the impending Federal Reserve meeting later this month. The nonfarm payrolls report for August revealed that the U.S. economy added 162,000 jobs last month, outpacing the broad-based expectations of 53,000 job additions. In addition to a reversal of the summer slowdown in hiring, the unemployment rate held steady at 4.1%, portraying stable labor market conditions. This apparently pulled down equity markets, while bond yields surged.
Surging oil prices further strained the markets and increased concerns that elevated energy prices will drive inflation higher, leading to a likely rate hike. With a lasting peace agreement in the Middle East fading to oblivion, market uncertainty remained elevated. As investors employ a wait-and-see approach in a classic example of "backing and filling" in the market, they can benefit from "cash cow" stocks that garner higher returns.
However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios, such as return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. The Allstate Corp., Arista Networks, Inc., Ross Stores, Inc., Gartner, Inc. and Micron Technology, Inc. are some of the stocks with high ROE to profit from.
Why ROE?
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 companies 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.
Here are five of the 12 stocks that qualified the screening:
Allstate: Headquartered in Northbrook, IL, Allstate is the third-largest property-casualty (P&C) insurer and the largest publicly held personal lines carrier in the United States. The company also provides a range of life insurance and investment products to its diverse customer base. It provides insurance products to approximately 16 million households through more than 12,000 exclusive agencies and financial specialists in the United States and Canada.
The company has a long-term earnings growth expectation of 12.5% and delivered a trailing four-quarter earnings surprise of 45.3%, on average. It has a VGM Score of A. Allstate sports a Zacks Rank #1 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Arista: Santa Clara, CA-based Arista is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company holds a leadership position in 100-gigabit Ethernet switching for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
The company has a long-term earnings growth expectation of 22.7%. It delivered a trailing four-quarter earnings surprise of 8.9%, on average. Arista sports a Zacks Rank #1.
Ross: Based in Dublin, CA, Ross is an off-price retailer of apparel and home accessories, offering in-season, branded and designer apparel, footwear, accessories and other home-related merchandise. Operating primarily in the United States, it targets middle-income households, keeping prices generally 20% to 60% below the regular prices of most department and specialty stores.
The company has a long-term earnings growth expectation of 14.6% and delivered a trailing four-quarter earnings surprise of 11.2%, on average. Ross carries a Zacks Rank #2 at present.
Gartner: Headquartered in Stamford, CT, Gartner is reportedly the world's leading information technology research and advisory firm. The company offers rich domain expertise and technology-related insight necessary for an informed decision-making process.
Gartner has a long-term earnings growth expectation of 20.1% and delivered a trailing four-quarter earnings surprise of 13.5%, on average. Gartner sports a Zacks Rank #1.
Micron: Headquartered in Idaho, Micron is one of the leading worldwide providers of semiconductor memory solutions. Through global brands, namely Micron, Crucial and Ballistix, it manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory, NAND flash memory, NOR Flash and other technologies. Its solutions are used in leading-edge computing, consumer, networking, mobile, automotive, industrial and data center products.
The company delivered a trailing four-quarter earnings surprise of 21.1%, on average. Micron carries a Zacks Rank #2 at present.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2986421/buy-5-high-roe-stocks-as-rate-hike-fears-keep-markets-at-bay
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks 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/
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.