Zacks.com featured highlights AutoNation, CNH Industrial, Valero Energy, Hologic and Ryder System
For Immediate Release
Chicago, IL – March 3, 2023 – Stocks in this week’s article are AutoNation, Inc. AN, CNH Industrial N.V. CNHI, Valero Energy Corp. VLO, Hologic, Inc. HOLX and Ryder System, Inc. R.
Top 5 Stocks with High ROE as Equity Markets Flop in February
The U.S. equity markets' downtrend continued in the past few trading sessions as strong economic data and a tight labor market portrayed signs that inflation was still a force to reckon with. Despite a solid start to the year, the equity markets largely remained choppy in February, while the 10-year Treasury yields jumped sharply to hit the highest level since November 2022. Experts widely believe that these will likely force the Fed to continue its aggressive stance against inflationary pressures.
Fed had earlier raised the interest rates by 25 basis points – much akin to the broader expectations – and kept the door ajar for future hikes as it indicated that the battle against inflation was far from over. It also expected economic growth to remain subdued in 2023. Average hourly earnings in January fell 0.2% on a sequential basis and were down 1.8% from a year ago. The uncertain business environment failed to paint a clearer picture of the overall economy and led to the cacophony that drove the broader equity market volatility.
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., CNH Industrial N.V., Valero Energy Corp., Hologic, Inc. and Ryder System, Inc. are some of the stocks with high ROE to profit from.
ROE: A Key Metric
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 22 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, it arranges financing for vehicle purchases through third-party sources.
It delivered a trailing four-quarter earnings surprise of 4.8%, on average. It has a VGM Score of A. Currently, AutoNation carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
CNHI carries a Zacks Rank #2. It delivered a trailing four-quarter earnings surprise of 14.1%, on average.
Valero Energy: San Antonio, TX-based Valero Energy is the largest independent refiner and marketer of petroleum products in the United States. The company was founded in 1980. Valero Energy has a refining capacity of 3.1 million barrels per day across 15 refineries throughout the United States, Canada and the United Kingdom.
The company has a long-term earnings growth expectation of 6% and delivered a trailing four-quarter earnings surprise of 19%, on average. Valero Energy sports a Zacks Rank #1.
Hologic: Headquartered in Bedford, MA, Hologic develops, manufactures and supplies diagnostics, medical imaging systems and surgical products that cater to the healthcare needs of women. The company is currently focusing on expanding its business across the patient continuum of care and has launched software products based on its investments in artificial intelligence.
The company has a long-term earnings growth expectation of 15.2% and delivered a trailing four-quarter earnings surprise of 30.6%, on average. Hologic sports a Zacks Rank #1.
Ryder: Florida-based Ryder is recognized as one of the world's largest providers of integrated logistics and transportation solutions. Ryder’s customers range from small businesses to large international enterprises. They are from a wide variety of industries, the most significant of which are automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing.
Ryder delivered a trailing four-quarter earnings surprise of 21.8%, on average. It has a VGM Score of A. It carries a Zacks Rank #2.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2060886/top-5-stocks-with-high-roe-as-equity-markets-flop-in-february
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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Ryder System, Inc. (R) : Free Stock Analysis Report
Valero Energy Corporation (VLO) : Free Stock Analysis Report
AutoNation, Inc. (AN) : Free Stock Analysis Report
Hologic, Inc. (HOLX) : Free Stock Analysis Report
CNH Industrial N.V. (CNHI) : Free Stock Analysis Report
