For Immediate Release
Chicago, IL – July 25, 2022 – Stocks in this week’s article are Oxford Industries OXM, The Chef's Warehouse CHEF and Sanderson Farms SAFM.
3 of the Most Efficient Stocks to Boost Your Portfolio Returns
Companies with promising efficiency levels are likely to be on investors' radar, irrespective of market conditions. This is because a company with a favorable efficiency level is expected to offer impressive returns as it is believed to be positively correlated with the company's price performance. Notably, efficiency, which is the ability to transform inputs into outputs, is a potential indicator of a company's financial health.
However, at times it becomes difficult to measure the efficiency level of a company. This is why one must consider popular efficiency ratios while selecting stocks. These efficiency ratios are:
Inventory Turnover: The ratio of 12-month cost of goods sold (COGS) to a four-quarter average inventory is considered one of the most-popular efficiency ratios. It indicates a company's ability to maintain a suitable inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which resulted in excess inventory.
Receivables Turnover: This is the ratio of 12-month sales to four-quarter average receivables. It shows a company's potential to extend its credit and collect debt in terms of that credit. A high receivables turnover ratio or the "accounts receivable turnover ratio" or "debtor's turnover ratio" is desirable as it shows that the company is capable of collecting its accounts receivables or that it has quality customers.
Asset Utilization: This ratio indicates a company's capability to convert assets into output and is thus a widely known measure of efficiency level. It is calculated by dividing total sales over the past 12 months by the last four-quarter average of total assets. Like the above ratios, high asset utilization may indicate that a company is efficient.
Operating Margin: This efficiency measure is the ratio of operating income over the past 12 months to sales over the same period. It measures a company's ability to control operating expenses. Hence, a high value of the ratio may indicate that the company manages its operating expenses more efficiently than its peers.
Here are the top three stocks that made it through the screen:
Oxford Industries is an apparel company which designs, sources, markets and distributes products bearing the trademarks of its owned and licensed brands. OXM has an average four-quarter positive earnings surprise of 99.7%.
The Chef's Warehouse is a distributor of specialty food products in the United States. CHEF has an average four-quarter positive earnings surprise of 372.3%.
Sanderson Farms is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. SAFM has an average four-quarter positive earnings surprise of 60.5%.
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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/1956269/3-of-the-most-efficient-stocks-to-boost-your-portfolio-returns
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Sanderson Farms, Inc. (SAFM) : Free Stock Analysis Report
Oxford Industries, Inc. (OXM) : Free Stock Analysis Report
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
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