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Zacks Equity Research
·5 min read
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For Immediate Release

Chicago, IL – December 29, 2020 - Stocks in this week’s article are CDW Corp. CDW, Rockwell Automation, Inc. ROK, AGNC Investment Corp. AGNC, KLA Corp. KLAC and D.R. Horton, Inc. DHI.

5 ROE Stocks to Buy as Markets Shrug Off Stimulus Challenges

Keeping up with the festive spirit, U.S. equity markets shrugged off potent threats from President Trump to veto the bill relating to additional stimulus and closed slightly higher on Christmas Eve after slipping earlier on soft consumer confidence. Despite risks pertaining to the new coronavirus strain emerging in some countries and rising infection cases in the country, overall market sentiments were relatively bullish on optimism over the successful passage of the stimulus bill approved by the Congress. With immunization process underway, the odds of a COVID-free world in 2021 were raised further, adding to the overall feel-good factor.

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.

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.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1224869/5-roe-stocks-to-buy-as-markets-shrug-off-stimulus-challenges

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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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. See these high-potential stocks free >>.

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KLA Corporation (KLAC) : Free Stock Analysis Report
 
Rockwell Automation, Inc. (ROK) : Free Stock Analysis Report
 
AGNC Investment Corp. (AGNC) : Free Stock Analysis Report
 
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
 
CDW Corporation (CDW) : Free Stock Analysis Report
 
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Zacks Investment Research