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5 Profitable Stocks Boasting Amazingly High Net Income Ratio
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Investors always look for companies with a high level of profitability regardless of the market condition. In this context, profitability analysis is used to identify a profitable company over a loss-making one. Profitability analysis is the best tool to measure the ability of the company to offer sturdy returns to investors even after meeting all its operating and non-operating costs.
Here, we have used the concept of accounting ratios to evaluate a company’s profitability. There is a variety of profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine the bottom-line performance of a company.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenues. Using net income ratio, one can determine a company’s effectiveness to meet operating and non-operating expenses from revenues. A higher net income ratio usually implies a company’s ability to generate ample revenues and successfully manage all business functions.
Screening Parameters
Net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well.
Trailing 12-Month Net Income Ratio Higher than X Industry: High net income ratio indicates a company’s solid profitability.
Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters narrowed down the universe of over 6,834 stocks to only 7.
Here are five of the 9 stocks that qualified the screen:
Universal Forest Products, Inc. (UFPI - Free Report) is the designer and marketer of wood and wood-alternative products. Its 12-month net profit margin is 3.9%.
ACM Research, Inc. (ACMR - Free Report) is a developer and manufacturer of single-wafer wet cleaning equipment. Its 12-month net profit margin is 16.6%.
Celsius Holdings, Inc. (CELH - Free Report) is a developer and distributor of calorie-burning fitness beverages. Its 12-month net profit margin is 15.7%.
Sony Corporation is a designer and developer of electronic equipment, instruments and devices. Its 12-month net profit margin is 9.9%.
LexinFintech Holdings Ltd. (LX - Free Report) is an online consumer finance platform for educated young adults. Its 12-month net profit margin is 27%.
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.
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.
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5 Profitable Stocks Boasting Amazingly High Net Income Ratio
Investors always look for companies with a high level of profitability regardless of the market condition. In this context, profitability analysis is used to identify a profitable company over a loss-making one. Profitability analysis is the best tool to measure the ability of the company to offer sturdy returns to investors even after meeting all its operating and non-operating costs.
Here, we have used the concept of accounting ratios to evaluate a company’s profitability. There is a variety of profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine the bottom-line performance of a company.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenues. Using net income ratio, one can determine a company’s effectiveness to meet operating and non-operating expenses from revenues. A higher net income ratio usually implies a company’s ability to generate ample revenues and successfully manage all business functions.
Screening Parameters
Net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank Equal to #1: No matter whether good market or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well.
Trailing 12-Month Net Income Ratio Higher than X Industry: High net income ratio indicates a company’s solid profitability.
Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters narrowed down the universe of over 6,834 stocks to only 7.
Here are five of the 9 stocks that qualified the screen:
Universal Forest Products, Inc. (UFPI - Free Report) is the designer and marketer of wood and wood-alternative products. Its 12-month net profit margin is 3.9%.
ACM Research, Inc. (ACMR - Free Report) is a developer and manufacturer of single-wafer wet cleaning equipment. Its 12-month net profit margin is 16.6%.
Celsius Holdings, Inc. (CELH - Free Report) is a developer and distributor of calorie-burning fitness beverages. Its 12-month net profit margin is 15.7%.
Sony Corporation is a designer and developer of electronic equipment, instruments and devices. Its 12-month net profit margin is 9.9%.
LexinFintech Holdings Ltd. (LX - Free Report) is an online consumer finance platform for educated young adults. Its 12-month net profit margin is 27%.
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.
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: https://www.zacks.com/performance.