Zacks.com featured highlights AutoNation, Suzano, Lockheed Martin, Nexstar Media and CNH Industrial
For Immediate Release
Chicago, IL – July 26, 2023 – Stocks in this week’s article are AutoNation, Inc. AN, Suzano S.A. SUZ, Lockheed Martin Corp. LMT, Nexstar Media Group, Inc. NXST and CNH Industrial N.V. CNHI.
Buy 5 Stocks with High ROE as Markets Rally on Solid Earnings
The U.S. equity markets witnessed a short-term rally for 11 days on the trot – the longest winning streak since February 2017 – buoyed by a solid earnings performance from hitherto reported companies. The better-than-expected corporate earnings driven by broad-based growth across sectors allayed the fears of a recession in the near term and instilled optimism.
The stock market rally was also perhaps driven by the Federal Reserve’s decision to hit a pause button for the rate hike program owing to a slowdown in inflation and maintain a benchmark interest rate in the range of 5-5.25%. However, the minutes from the Jun 13-14 Fed meeting revealed that more rate hikes are in the cards to bring inflation close to the targeted 2% level.
The focus has now shifted to the Fed’s Jul 25-26 policy meeting, which is likely to be another potential market catalyst. Investors widely expect a quarter percentage point hike in the interest rates at the conclusion of this meeting. With about 30% of the blue-chip S&P 500 stocks slated to report earnings this week, investors are likely to look for cues about the broader economy and the trajectory of future interest rate hikes.
As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they can benefit from “cash cow” stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. AutoNation, Inc., Suzano S.A., Lockheed Martin Corp., Nexstar Media Group, Inc. and CNH Industrial N.V. are some of the stocks with high ROE to profit from.
Why ROE?
ROE = Net Income/Shareholders’ Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry — the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management’s efficiency in rewarding shareholders with attractive risk-adjusted returns.
Here are five of the 20 stocks that qualified the screen:
AutoNation: Incorporated in Delaware in 1991, AutoNation is the largest automotive retailer in the United States. Apart from retailing new and used vehicles, the company offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products and other aftermarket products. In addition, AutoNation arranges financing for vehicle purchases through third-party sources.
It has a VGM Score of A. The stock delivered a trailing four-quarter earnings surprise of 4.8%, on average. AutoNation carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Suzano: Headquartered in Salvador, Brazil, Suzano produces and sells eucalyptus pulp and paper products. With more than 90 years of experience, this vertically integrated firm is one of the largest producers of paper and graphic products in South America.
Suzano has a long-term earnings growth expectation of 6.9% and delivered a trailing four-quarter earnings surprise of 54.8%, on average. It has a VGM Score of B. It sports a Zacks Rank #1.
Lockheed Martin: Headquartered in Bethesda, MD, Lockheed Martin is the largest defense contractor in the world. Its main areas of focus are in defense, space, intelligence, homeland security and information technology, including cyber security.
Lockheed Martin carries a Zacks Rank #2. It has a long-term earnings growth expectation of 6.5% and delivered a trailing four-quarter earnings surprise of 5%, on average. It has a VGM Score of B.
Nexstar Media: Headquartered in Irving, TX, Nexstar Media is a leading diversified media firm that produces and distributes engaging local and national news, sports and entertainment content across television, streaming and digital platforms. It also offers premium multiplatform and video-on-demand advertising opportunities at scale for businesses and brands seeking to leverage its strong client base.
The company has a long-term earnings growth expectation of 10% and delivered a trailing four-quarter earnings surprise of 21.4%, on average. Nexstar Media sports a Zacks Rank #1.
CNH Industrial: Headquartered in London, the United Kingdom, CNH Industrial is one of the leading equipment and services companies engaged in the manufacture and sale of agricultural and construction equipment. Currently, CNH Industrial has a commercial presence in approximately 180 countries.
The company delivered a trailing four-quarter earnings surprise of 13.4%, on average. CNH Industrial carries a Zacks Rank #2.
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/2126727/buy-5-stocks-with-high-roe-as-markets-rally-on-solid-earnings
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
Get it free >>
Follow us on Twitter: https://www.twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
AutoNation, Inc. (AN) : Free Stock Analysis Report
Nexstar Media Group, Inc (NXST) : Free Stock Analysis Report
CNH Industrial N.V. (CNHI) : Free Stock Analysis Report
Suzano S.A. Sponsored ADR (SUZ) : Free Stock Analysis Report
