One of the quickest ways to gauge whether a company is creating assets or gobbling up investor’s cash is to look at their Return On Equity (ROE). The fast moving ROE Profit Track screening strategy from Zacks.com has generated an impressive return of +21.4% in 2005. In 2006, it continued to outperform the S&P 500, returning 27.0% versus the S&P 500 rise of 16.7%. Four stocks meeting this screen’s exclusive criteria are Bunge Ltd. (NYSE: BG), Kaiser Aluminum Corporation (NASDAQ: KALU), Brinks Co. (NYSE: BCO) and WGL Holdings Inc. (NYSE: WGL). View the entire list of stocks for the ROE Profit Track at http://at.zacks.com/?id=1853
Here are details about four companies currently identified by the ROE Profit Track:
Bunge Ltd. (NYSE: BG) sports a ROE of 15.26%, which meets this screen’s requirement of greater than or equal to 10%. It also signifies that the agriculture and food giant is generating assets. This Zacks #1 Rank company had a great year, with revenue increasing to approximately $44.8 million from $26.3 million one year ago. BG also has a price/sales ratio of .30 and an average broker recommendation of 2.14. In addition, Bunge Ltd.’s fiscal 2007 year performance included a positive earnings per share surprise. The company currently expects its fiscal 2008 net income between $830 million and $870 million, or $6.01 to $6.30 per share.
Kaiser Aluminum Corporation (NASDAQ: KALU) placed on this profit track with a ROE of 20.50% and an average broker rating of 1. There was a boost in the company’s fourth quarter earnings, as demand for aerospace and defense products increased. KALU’s fourth quarter net profits amounted to $24 million compared to $12 million the previous year. Additionally, the Zacks #1 Rank has a low price/sales ratio of 1, which suggests that KALU is a good value. KALU is a leading producer of fabricated aluminum products for aerospace, automotive, and custom industrial applications.
Brinks Co. (NYSE: BCO) has a ROE of 16.92% and a price/sales ratio of 0.96. These two factors, in addition to the Zacks #1 Rank, make this security industry company a top performer on the ROE profit track. On Jan 21, Brinks Co. reported an increase in its fourth quarter profits. BCO attributed the $137.7 million increase to growth in the Latin American and European operations. BCO holds a Zacks #1 Rank and a price/sales ratio of 0.96.
WGL Holdings Inc. (NYSE: WGL) is a public utility holding company that placed on this profit track with a ROE of 10.53% and a Zacks #1 Rank. Although WGL’s earnings dropped $13.5 million in the fourth quarter, due to lower demand for natural gas, the overall profit for fiscal year 2007 was $107.9 million, up 22% from 2006. WGL wrapped up the first quarter for the fiscal year 2008 with an increase in earnings and, as a result, decided to raise its earnings estimates to a range of $2.30 to $2.40 per share. WGL Holdings Inc. sports a price/sales ratio of .60 and an average broker rating of 2.20.
Discover all the current stocks currently on the ROE Profit Track at: http://at.zacks.com/?id=1854
About Profit Tracks
What is a "Profit Track"? Each Profit Track is a successful stock picking strategy with proven results through the Bear Market of 2001-2002 and the Bull run started in 2003. On Zacks.com we have created these nine unique screens to offer investors great strategies to potentially outperform the market in the years ahead. In 2006, the Low Price Stocks strategy was the top performing Profit Track with a return of +56.5% followed by the Discounted Fundamental screen with a +34% return. To see all nine strategies along with philosophy, past performance and current stocks, go to http://at.zacks.com/?id=1838.
All the Profit Track strategies were created and backtested using the Research Wizard software from Zacks Investment Research. If you like this screening strategy, but want to narrow down the list of stocks and even improve the performance, then you should start a free trial to this powerful stock picking tool. Learn more about the Research Wizard free trial offer and our new special report “Top 10 Stock Screening Strategies” at http://at.zacks.com/?id=2156
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=1841
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.
The performance calculations for the Profit Track strategies were produced through the backtesting feature of the Research Wizard using the DBCMHIST database and consist of the total return (price changes + dividends) of an equal weighted portfolio. Returns are calculated on a specified periodic basis (four weeks for all Profit Track strategies except for Growth and Income and High Rank Value, which use a 24-week holding period) and assume no transaction costs. Each strategy is rebalanced at the start of each new period. Returns can be stated as either annualized or compounded.
Stock trading/investing involves risk and you can lose some or all of your investment. Hypothetical or backtested results may not always be duplicated in the real world. Backtesting can at times produce an unintended look-ahead bias. Results can also at times be over or understated due to the exclusion of inactive companies. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading, not the least of which is the ability to withstand losses or to adhere to a particular trading strategy in spite of trading losses. These are material points which can also adversely affect actual trading results. The backtested results prepared for the Profit Track strategies were done using the DBCMHIST database and consisted of only active companies. The Research Wizard program has been aligned, to the extent possible, to eliminate look-ahead bias. Zacks however cannot make any guarantees in regard to this or any other possible limitation.
The S&P 500 Index ("S&P 500") is a well-known, unmanaged index of the prices of 500 large-company common stocks selected by Standard & Poor's. The S&P 500 includes the reinvestment of all dividends, no transaction costs, and represents the gross returns before management fees.
Performance information for other Zacks’ portfolios and strategies is available at: http://www.zacks.com/performance
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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