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3 Stocks With High Return on Equity Ratios

GuruFocus.com
·4 mins read

- By Alberto Abaterusso

When a company's return on equity (ROE) ratio beats that of the majority of its peers, it usually implies that the company has been better than its competitors in generating profits.

Thus, investors may want to consider the following stocks, as they are beating most of their peer companies in terms of a higher ROE ratio.

Advanced Micro Devices Inc


The first stock investors may want to consider is Advanced Micro Devices Inc (NASDAQ:AMD), a Santa Clara, California-based global semiconductors manufacturer.

Advanced Micro Devices Inc has a ROE ratio of 23%, beating the industry median of 5.68% enormously.

The share price has climbed 169.3% over the past year up to $78.06 at close on Friday for a market capitalization of $91.64 billion and a 52-week range of $27.43 to $94.28.

3 Stocks With High Return on Equity Ratios
3 Stocks With High Return on Equity Ratios

The stock has a price-book ratio of 27.73 (versus the industry median of 2.06) and a price-earnings ratio of 147.28 (versus the industry median of 25.55).

As of September, Wall Street recommends five strong buys, six buys, 15 holds, four underperform ratings and one sell rating for the stock. It has established an average target price of $ 78.49 per share. Sell-side analysts also predict that the net earnings per share (EPS) will increase by 71.9% this year, 50.9% next year and by 35.83% every year over the next five years.

GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability rating of 5 out of 10 to the company.

Advanced Micro Devices Inc is not paying dividends.

Coca-Cola Co

The second stock under consideration is Coca-Cola Co (NYSE:KO), a U.S. beverage giant.

Coca-Cola Co has a ROE ratio of 50.2%, which is beating the industry median of 8.85%.

The share price has fallen by 10.5% over the past year down to $48.72 at close on Friday for a market capitalization of $209.27 billion and a 52-week range of $36.27 to $60.13.

3 Stocks With High Return on Equity Ratios
3 Stocks With High Return on Equity Ratios

The stock has a price-book ratio of 11.97 (versus the industry median of 2.18) and a price-earnings ratio of 22.98 (versus the industry median of 22.3).

As of September, Wall Street recommends four strong buy ratings, seven buy ratings, 13 hold ratings and one underperform rating for the stock. Sell-side analysts have produced an average target price of $53.90 per share. The EPS is forecasted to decline by 14.2% this year before rising again by 14.4% in 2021. Over the next five years, EPS is expected to increase by 2.93% per annum.

GuruFocus has assigned a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10 to the company.

Currently, Coca-Cola Co distributes a quarterly cash dividend of 41 cents per common share, which, based on Friday's closing price, produces a 3.35% trailing 12-month yield and a 3.37% forward yield. The S&P 500's dividend yields 1.81% as of Sept. 25.

JD.com Inc

The third stock to consider is JD.com Inc (NASDAQ:JD), a Chinese e-commerce company.

JD.com Inc has a ROE ratio of 24.16%, which is beating the industry median of 2.68%.

The share price has risen by 164.7% over the past year up to $74.67 at close on Friday for a market capitalization of $108.55 billion and a 52-week range of $27.47 to $86.58.

3 Stocks With High Return on Equity Ratios
3 Stocks With High Return on Equity Ratios

The price-book ratio is 5.97 (versus the industry median of 1.44) and the price-earnings ratio is 37.58 (versus the industry median of 21.61).

As of September, Wall Street recommends 10 strong buys, 22 buys, four holds and one sell rating for the stock. Sell-side analysts have set an average target price of $78.61 per share. The EPS is predicted to increase by 50.5% this year, 42% in 2021 and 6% on average per annum over the next five years.

GuruFocus has assigned a financial strength rating of 6 out of 10 and a profitability rating of 4 out of 10 to the company.

JD.com Inc does not pay dividends.

Disclosure: I have no positions in any security mentioned in this article.

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This article first appeared on GuruFocus.