Focus On These 4 Profitable Stocks For Striking Returns
Zacks Investment Research | Jun 22, 2017 08:34AM ET
A company’s ability to offer attractive returns to its investors even after meeting all its business-related costs and expenses can be evaluated using the profitability analysis. A company with strong profitability and weak fundamentals may fail to perform effectively. However, multiple studies have indicated that a profitable entity generally offers huge returns.
Here we have used the concept of accounting ratios to evaluate a company’s profitability. There are a variety of profitability ratios, from which we have chosen the most common and successful profitability metric to determine the bottom-line performance of a company.
Net Income Ratio
Net income ratio gives us the exact profitability level of a company. It reflects the percentage of net income to total sales revenue. Using net income ratio, one can determine a company’s effectiveness to pay for its operating and non-operating expenses from its revenue. A higher net income ratio usually implies a company’s ability to generate ample revenue and successfully manage all its business functions.
Screening Parameters
Net income ratio is not the only indicator of future winners. So 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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