4 Profitable Stocks To Buy For Marvelous Gains
Zacks Investment Research | Apr 19, 2017 09:17PM ET
A profitable company has the ability to provide attractive returns as well as meet all its expenses. Although a profitable company with weak fundamentals might face some hindrances, several studies indicate that a company with a high level of profitability is a favorable investment option.
Here, we have used ratio analysis to evaluate the profitability of a company. There are four vital profitability ratios, which include gross income ratio, operating income ratio, pre-tax profit margin and net income ratio. From these, we have selected net income ratio, which is the most widely used and transparent profitability ratio.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total revenue. Using net income ratio, one can determine a company’s ability to meet operating and non-operating expenses. A higher net income ratio usually implies a company’s ability to generate ample revenues and successfully manage all its business functions.
Screening Parameters
As net income ratio is not the only indicator of future winners, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank equal to #1: Only Zacks Rank #1 (Strong Buy) stocks are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off. You can see Zacks Investment Research
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