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5 Must-Buy Efficient Stocks to Enrich Your Portfolio
Irrespective of market conditions, companies with favorable efficiency levels are more likely to be investors’ choices. The reason is that a company with a favorable efficiency level is expected to offer impressive returns as it is believed to be positively correlated to its price performance.
Efficiency ratio is an indication of a company’s financial health. It analyzes how efficiently a company uses its assets and liabilities internally.
However, at times it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks.
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or “debtor’s turnover ratio” is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company’s capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Inventory Turnover: The ratio of the 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
The use of these few criteria narrowed down the universe of over 7,906 stocks to 14.
Here are the top five stocks that made it through the screen:
Daktronics is one of the world's largest suppliers of electronic scoreboards, computer-programmable displays and large-screen video displays and control systems. DAKT has an average four-quarter positive earnings surprise of 92.9%.
Hess is a leading oil and natural gas exploration and production company. HES has an average four-quarter positive earnings surprise of 35.7%.
Advanced Drainage Systems is a manufacturer of thermoplastic corrugated pipes, providing a comprehensive suite of water management products and drainage solutions for use in the construction and infrastructure marketplace. WMS has an average four-quarter positive earnings surprise of 30.5%.
Apogee Enterprises is a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings as well as value-added glass and acrylic for custom picture framing and displays. APOG has an average four-quarter positive earnings surprise of 23.4%.
GENEDX HOLDINGS is at the forefront of transforming healthcare through its industry-leading exome and genome testing and interpretation, fueled by rare disease data sets. WGS has an average four-quarter positive earnings surprise of nearly 17.9%.
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.
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/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
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Zacks.com featured highlights include Daktronics, Hess, Advanced Drainage Systems, Apogee and GENEDX
For Immediate Release
Chicago, IL – July 15, 2024 – Stocks in this week’s article are Daktronics (DAKT - Free Report) , Hess (HES - Free Report) , Advanced Drainage Systems (WMS - Free Report) , Apogee Enterprises (APOG - Free Report) and GENEDX HOLDINGS (WGS - Free Report) .
5 Must-Buy Efficient Stocks to Enrich Your Portfolio
Irrespective of market conditions, companies with favorable efficiency levels are more likely to be investors’ choices. The reason is that a company with a favorable efficiency level is expected to offer impressive returns as it is believed to be positively correlated to its price performance.
Efficiency ratio is an indication of a company’s financial health. It analyzes how efficiently a company uses its assets and liabilities internally.
However, at times it becomes difficult to measure the efficiency level of a company. This is why one must consider the popular efficiency ratios listed below while selecting stocks.
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company’s potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the “accounts receivable turnover ratio” or “debtor’s turnover ratio” is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company’s capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Inventory Turnover: The ratio of the 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company’s ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
The use of these few criteria narrowed down the universe of over 7,906 stocks to 14.
Here are the top five stocks that made it through the screen:
Daktronics is one of the world's largest suppliers of electronic scoreboards, computer-programmable displays and large-screen video displays and control systems. DAKT has an average four-quarter positive earnings surprise of 92.9%.
Hess is a leading oil and natural gas exploration and production company. HES has an average four-quarter positive earnings surprise of 35.7%.
Advanced Drainage Systems is a manufacturer of thermoplastic corrugated pipes, providing a comprehensive suite of water management products and drainage solutions for use in the construction and infrastructure marketplace. WMS has an average four-quarter positive earnings surprise of 30.5%.
Apogee Enterprises is a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings as well as value-added glass and acrylic for custom picture framing and displays. APOG has an average four-quarter positive earnings surprise of 23.4%.
GENEDX HOLDINGS is at the forefront of transforming healthcare through its industry-leading exome and genome testing and interpretation, fueled by rare disease data sets. WGS has an average four-quarter positive earnings surprise of nearly 17.9%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2300555/5-must-buy-efficient-stocks-to-enrich-your-portfolio
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/performance for information about the performance numbers displayed in this press release.