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A Trio of High Return on Equity Stock Picks to Consider

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GuruFocus.com
·3 min read
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- By Alberto Abaterusso

When a company's return on equity (ROE) ratio outperforms most of its peers, it indicates the company has been very efficient in generating earnings.

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

Novartis AG


The first stock to consider is Novartis AG (NYSE:NVS), a Swiss drug giant.

Novartis AG has a ROE ratio of 15.08% (versus the industry median of 3.31%), ranking higher than 80% of 984 companies that are operating in the drug manufacturers industry.

The share price has fallen by nearly 6% over the past year and closed at $91.46 on Tuesday for a market capitalization of $206.93 billion and a 52-week range of $69.18 to $98.52.

A Trio of High Return on Equity Stock Picks to Consider
A Trio of High Return on Equity Stock Picks to Consider

The stock has a price-book ratio of 3.71 and a price-earnings ratio of 24.97.

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

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $107.50 per share.

BHP Group PLC

The second stock to consider is BHP Group PLC (NYSE:BBL), an Australian explorer, developer and producer of oil and gas and miner of base and precious metals.

BHP Group PLC has a ROE ratio of 12.86% (compared to the industry median of -15.58%), which ranks higher than 93% of the 2,111 companies that are operating in the metals and mining industry.

The share price has risen by 43% over the past year up to $62.60 at close on Tuesday for a market capitalization of $159.03 billion and a 52-week range of $23.64 to $63.24.

A Trio of High Return on Equity Stock Picks to Consider
A Trio of High Return on Equity Stock Picks to Consider

The stock has a price-book ratio of 3.01 and a price-earnings ratio of 18.53.

GuruFocus has assigned a score of 5 out of 10 to the financial strength rating and of 8 out of 10 to the profitability rating of the company.

On Wall Street, the stock has one recommendation rating of buy with a target price of $65 per share.

Service Corp International

The third stock to consider is Service Corp International (NYSE:SCI), a Houston, Texas-based provider of funeral products and services in North America.

Service Corp has a ROE ratio of 29.15% (versus the industry median of 3.82%), ranking higher than 90% of the 93 companies that are operating in the personal services industry.

The share price was $50.74 at close on Tuesday, flat from year-ago levels, determining a market capitalization of $8.77 billion and a 52-week range of $33.93 to $54.67.

A Trio of High Return on Equity Stock Picks to Consider
A Trio of High Return on Equity Stock Picks to Consider

The price-book ratio is 5.07 and the price-earnings ratio is 19.90.

GuruFocus has assigned a score of 3 out of 10 to the financial strength rating and a score of 8 out of 10 to the profitability rating of the company.

On Wall Street, the stock has a median recommendation rating of buy with an average target price of $56.88 per share.

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

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This article first appeared on GuruFocus.