Zacks.com Featured Highlights Include: General Motors, Boston Scientific, Antero NRG, AMC And Celanese
Zacks Investment Research | Jun 18, 2018 10:21PM ET
For Immediate Release
Chicago, IL – June 19, 2018 - Stocks in this week’s article General Motors Company (NYSE:GM) , Boston Scientific Corp. (NYSE:BSX) , Antero NRG Energy, Inc. (NYSE:NRG) , AMC Networks Inc. (NASDAQ:AMCX) and Celanese Corp. (NYSE:CE) .
Top 5 ROE Stocks to Buy as Trump Keeps Trade War Fears Alive
The on-again off-again trade war between the United States and China took a new turn when President Trump imposed a fresh salvo of tariffs worth $50 billion on Chinese imports last week. This followed an immediate retaliation by China, which promised to match the scale of the trade restrictions on a vast array of U.S. goods. The flurry of events caused a mild slide in most of the benchmark indices as tensions brewed among the investor community.
Although overall economic sentiments appear bullish with improving wages and promising labor market conditions prompting Fed to increase the interest rates, domestic trade concerns appear far from over and are likely to weigh on the equity markets.
As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they could benefit from ‘cash cow’ stocks that garner higher returns.
However, singling out cash-rich stocks alone does not make for a solid investment proposition unless they are backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting its 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 stocks 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.
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