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Zacks.com Featured Highlights Include Texas Instruments, CBRE Group, Sandvik, Applied Materials And Lloyds Banking Group

Published 09/13/2017, 10:46 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – September 14, 2017 - Stocks in this week’s article include Texas Instruments Inc. (Nasdaq: (NASDAQ:TXN) – Free Report), CBRE Group, Inc. (NYSE: (NYSE:CBG) – Free Report), Sandvik AB (OTCMKTS: (OTC:SDVKY) – Free Report), Applied Materials, Inc. (Nasdaq: (NASDAQ:AMAT) – Free Report) and Lloyds Banking Group (LON:LLOY) plc (NYSE: (NYSE:LYG) – Free Report).

Screen of the Week of Zacks Investment Research:

5 Top ROE Stocks to Buy as Irma Dissipates

The U.S. equity markets shrugged off initial fears and scaled near record highs as Hurricane Irma had a lesser-than-expected impact on Florida and worries about another North Korea missile test by the weekend ebbed. As investors regained their appetite for riskier bets like equities, courtesy of strengthening dollar and sell-off in global bond markets, ‘cash cow’ stocks that offer higher returns have come to the forefront.

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.

Why ROE?

ROE = Net Income/Shareholders’ Equity

ROE helps investors distinguish between profit-generating companies from profit burners and is useful for 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 increasing its profits without investing new equity capital in the business and portrays management efficiency in rewarding shareholders with attractive risk-adjusted returns.

Parameters Used for Screening

In order to shortlist stocks that are cash rich with high ROE, we have added Cash Flow greater than $1 billion and ROE greater than X-Industry as our primary screening parameters. In addition, we have taken a few other criteria into consideration to arrive at a winning strategy.

Price/Cash Flow less than X-Industry: This metric measures how much investors pay for one dollar of free cash flow. A lower ratio indicates that investors need to pay less for a better cash flow generating stock.

Return on Assets (ROA) greater than X-Industry: This metric determines how much profit a company earns for every dollar of asset, which includes cash, accounts receivable, property, equipment, inventory and furniture. The higher the ROA, the better it is for the company.

5-Year EPS Historical Growth greater than X-Industry: This criterion indicates that continued earnings momentum has translated into solid cash strength.

Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment.

Here are five of the 15 stocks that qualified the screen:

Texas Instruments Inc. (Nasdaq: TXNFree Report): Headquartered in Dallas, TX, Texas Instruments is an original equipment manufacturer of analog, mixed signal and digital signal processing integrated circuits. The company has a trailing four-quarter average earnings surprise of 8.4% and long-term earnings growth expectation of 9.6%. Texas Instruments carries a Zacks Rank #2.

CBRE Group, Inc. (NYSE: CBGFree Report): Headquartered in Los Angeles, CBRE Group is a commercial real estate services and investment firm, offering a wide range of services to tenants, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estates in all major metropolitan areas across the globe. The company has a trailing four-quarter average earnings surprise of 18.7% and long-term earnings growth expectation of 13%. CBRE Group sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandvik AB (OTCMKTS: SDVKYFree Report): Headquartered in Stockholm, Sweden, Sandvik operates as a high-tech and global engineering firm in the field of rock excavation, metal-cutting, and materials technology. The company has a Zacks Rank #2.

Applied Materials, Inc. (Nasdaq: AMATFree Report): Headquartered in Santa Clara, CA, Applied Materials offers manufacturing equipment, services and software to the semiconductor, display, and related industries worldwide. This Zacks Rank #1 stock has a trailing four-quarter average earnings surprise of 2.7% and long-term earnings growth projection of 17.1%.

Lloyds Banking Group plc (NYSE: LYGFree Report): Headquartered in London, Lloyds Banking Group provides banking and financial services to individual and business customers in the U.K. and internationally. The company has a Zacks Rank #2.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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.

About Screen of the Week

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.



Lloyds Banking Group PLC (LYG): Free Stock Analysis Report

Sandvik AB (SDVKY): Free Stock Analysis Report

CBRE Group, Inc. (CBG): Free Stock Analysis Report

Texas Instruments Incorporated (TXN): Free Stock Analysis Report

Applied Materials, Inc. (AMAT): Free Stock Analysis Report

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