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A Trio of Stock Picks With High Returns on Equity

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·3 min read
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- By Alberto Abaterusso

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

Thus, investors could be interested in the following securities, as they are outperforming most of their peers in terms of a higher ROE ratio.

Digital Turbine Inc


The first stock to consider is Digital Turbine Inc (NASDAQ:APPS), an Austin, Texas-based provider of application software solutions to device application developers, original equipment manufacturers and mobile operators.

Digital Turbine has a ROE ratio of 56% (versus the industry median of 4.9%), ranking higher than 96% of 2,180 companies that are operating in the software industry.

The share price was $62.78 at close on Tuesday, representing a 14-fold increase from a year ago, for a market capitalization of $5.61 billion and a 52-week range of $5.22 to $102.56.

A Trio of Stock Picks With High Returns on Equity
A Trio of Stock Picks With High Returns on Equity

The stock has a price-book ratio of 50.10 and a price-earnings ratio of 151.64.

GuruFocus has assigned a score of 7 out of 10 for the company's financial strength rating and 3 out of 10 for its profitability rating.

On Wall Street, the stock has a median recommendation rating of buy and an average target price of $103.20 per share.

Lazard Ltd

The second stock investors could be interested in is Lazard Ltd (NYSE:LAZ), a Hamilton, Bermuda-based provider of financial advisory and asset management services in North America and internationally.

Lazard has a ROE ratio of 41% (versus the industry median of 6%), which ranks higher than 96% of the 746 companies that are operating in the capital markets industry.

The share price has risen by 81.83% over the past year to trade at $44.84 at close on Tuesday for a market capitalization of $4.72 billion and a 52-week range of $23.18 to $47.35.

A Trio of Stock Picks With High Returns on Equity
A Trio of Stock Picks With High Returns on Equity

The stock has a price-book ratio of 6.22 and a price-earnings ratio of 12.09.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 7 out of 10 rating to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $52.33 per share.

The Wendy's Co

The third stock to consider is The Wendy's Co (NASDAQ:WEN), a Dublin, Ohio-based global operator of a chain of quick-service restaurants, where about 360 are managed by the company while another 5,500 are franchises.

The Wendy's Co has a ROE ratio of 28.93% (versus the industry median of -14.74%), ranking higher than 95% of the 298 companies that are operating in the restaurants industry.

The share price increased by nearly 15% over the past year to trade at $22.80 at close on Tuesday, determining a market capitalization of $5.06 billion and a 52-week range of $18.86 to $24.91.

A Trio of Stock Picks With High Returns on Equity
A Trio of Stock Picks With High Returns on Equity

The price-book ratio is 9.30 and the price-earnings ratio is 44.71.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and a 7 out of 10 rating to its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $24.85 per share.

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

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This article first appeared on GuruFocus.