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Finding Top-Ranked Stocks to Buy in July Efficiently Generating Profits
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The Nasdaq and the S&P 500 bounced back through morning trading Tuesday following a brief downturn over the last few sessions that helped cool things off a bit to close out June.
There could be more volatility in the near term as market-moving news runs a little dry until the big banks kick off earnings season on July 12.
The first half of 2024 has showcased that investors are well served to stay invested since the outlook for EPS expansion and Fed rate cuts should fuel the market rally.
Investors who want to buy stocks in July and the second half of 2024 might want to start by looking at Zacks Rank #1 (Strong Buy) stocks—improving earnings outlook—that are efficiently generating profits.
ROE
Return on Equity or ROE helps investors understand if a firm’s executives are creating assets with investors’ cash or burning it. ROE shows a company’s ability to turn assets into profits. Put another way, this vital metric measures the profits made for each dollar of shareholder equity.
ROE is calculated as net income / shareholder's equity. For example: if $0.10 of assets are created for each $1 of shareholder equity that would equal a ROE of 10%.
Overall, Return on Equity is a great item to use regardless of what type of investor you are since it provides insight into management’s ability to create value and keep costs under control. Plus, if ROE slips, it can alert us to potential problems.
With all that said, let’s take a look at this screen’s parameters and see the companies proving they can return value to shareholders instead of churning through their cash…
• Zacks Rank equal to 1
The Zacks Rank looks at upward earnings estimate revisions, among other metrics, in order to find companies that are projected to see their earnings get stronger. In fact, beginning with a Zacks Rank #1 can be a great starting point because it boasts an average annual return of over 25% per year during the last 30 years.
• Price greater than or equal to 5
Today we ruled out any stocks that are trading for less than $5 a share because they can be more volatile and speculative.
• Price/Sales Ratio less than or equal to 1
On top of that, we are looking for a low price to sales ratio. Today we went with 1 or below as this range is usually thought to provide better value since investors pay less for each unit of sales.
• % (Broker) Rating Strong Buy equal to 100 (%)
In this screen, we decided to go with companies that brokers are fully on board with since ratings are typically skewed strongly toward ‘buy’ and ‘strong buy.’
• ROE greater than or equal to 10
Lastly, but most importantly for today’s screen, we got rid of any companies with Return on Equity of less than 10 because the median ROE value for all of the stocks in the Zacks Universe is under 10.
Here is one of the six stocks that made it through today’s screen…
Virco is a top manufacturer and supplier of furniture and equipment for K-12 schools. Virco’s core education-focused customer base also includes junior and community colleges, four-year colleges and universities, trade, technical and vocational schools, and beyond. On top of schools, Virco sells its furniture and equipment to convention centers and arenas, as well as banquet and meeting facilities, government facilities, and other larger venues.
Image Source: Zacks Investment Research
Virco’s revenue has soared over the last few years following its rough Covid year. VIRC posted blow first-quarter fiscal 2024 (ended Apr 30) results earlier this month. Virco is projected to grow its sales by 14% this year to help boost its adjusted earnings by 39%. Virco’s REO sits at 28.4% to crush its industry’s 9.6% average. Virco’s Furniture space is in the top 24% of over 250 Zacks industries and VIRC pays a dividend.
Virco shares have climbed 280% in the last year, driven by surging earnings estimate revisions. VIRC is attempting to find support at its 21-day moving average, while trading at a 40% discount to its industry at 8.3X forward 12-month earnings.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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.
Image: Bigstock
Finding Top-Ranked Stocks to Buy in July Efficiently Generating Profits
The Nasdaq and the S&P 500 bounced back through morning trading Tuesday following a brief downturn over the last few sessions that helped cool things off a bit to close out June.
There could be more volatility in the near term as market-moving news runs a little dry until the big banks kick off earnings season on July 12.
The first half of 2024 has showcased that investors are well served to stay invested since the outlook for EPS expansion and Fed rate cuts should fuel the market rally.
Investors who want to buy stocks in July and the second half of 2024 might want to start by looking at Zacks Rank #1 (Strong Buy) stocks—improving earnings outlook—that are efficiently generating profits.
ROE
Return on Equity or ROE helps investors understand if a firm’s executives are creating assets with investors’ cash or burning it. ROE shows a company’s ability to turn assets into profits. Put another way, this vital metric measures the profits made for each dollar of shareholder equity.
ROE is calculated as net income / shareholder's equity. For example: if $0.10 of assets are created for each $1 of shareholder equity that would equal a ROE of 10%.
Overall, Return on Equity is a great item to use regardless of what type of investor you are since it provides insight into management’s ability to create value and keep costs under control. Plus, if ROE slips, it can alert us to potential problems.
With all that said, let’s take a look at this screen’s parameters and see the companies proving they can return value to shareholders instead of churning through their cash…
• Zacks Rank equal to 1
The Zacks Rank looks at upward earnings estimate revisions, among other metrics, in order to find companies that are projected to see their earnings get stronger. In fact, beginning with a Zacks Rank #1 can be a great starting point because it boasts an average annual return of over 25% per year during the last 30 years.
• Price greater than or equal to 5
Today we ruled out any stocks that are trading for less than $5 a share because they can be more volatile and speculative.
• Price/Sales Ratio less than or equal to 1
On top of that, we are looking for a low price to sales ratio. Today we went with 1 or below as this range is usually thought to provide better value since investors pay less for each unit of sales.
• % (Broker) Rating Strong Buy equal to 100 (%)
In this screen, we decided to go with companies that brokers are fully on board with since ratings are typically skewed strongly toward ‘buy’ and ‘strong buy.’
• ROE greater than or equal to 10
Lastly, but most importantly for today’s screen, we got rid of any companies with Return on Equity of less than 10 because the median ROE value for all of the stocks in the Zacks Universe is under 10.
Here is one of the six stocks that made it through today’s screen…
Virco Manufacturing ((VIRC - Free Report) )
Virco is a top manufacturer and supplier of furniture and equipment for K-12 schools. Virco’s core education-focused customer base also includes junior and community colleges, four-year colleges and universities, trade, technical and vocational schools, and beyond. On top of schools, Virco sells its furniture and equipment to convention centers and arenas, as well as banquet and meeting facilities, government facilities, and other larger venues.
Image Source: Zacks Investment Research
Virco’s revenue has soared over the last few years following its rough Covid year. VIRC posted blow first-quarter fiscal 2024 (ended Apr 30) results earlier this month. Virco is projected to grow its sales by 14% this year to help boost its adjusted earnings by 39%. Virco’s REO sits at 28.4% to crush its industry’s 9.6% average. Virco’s Furniture space is in the top 24% of over 250 Zacks industries and VIRC pays a dividend.
Virco shares have climbed 280% in the last year, driven by surging earnings estimate revisions. VIRC is attempting to find support at its 21-day moving average, while trading at a 40% discount to its industry at 8.3X forward 12-month earnings.
Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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: www.zacks.com/performance_disclosure