For immediate release
Chicago, IL – May 5, 2022 – Stocks in this week’s article are AutoNation AN, AZZ AZZ and Matador Resources MTDR.
3 Top-Rated Effective Stocks to Add to Your Portfolio
A company with a favorable level of efficiency should provide stellar returns as it is believed to be positively correlated with price performance. The level of efficiency, which measures a company’s ability to transform available inputs into outputs, is often considered an important parameter in assessing a company’s potential to make profits.
But, sometimes it becomes difficult to measure the level of efficiency of a company. This is the reason why popular efficiency ratios should be considered when selecting stocks. These efficiency ratios are:
Operating margin: This measure of efficiency is the ratio between the operating result for the last 12 months and the turnover for the same period. It measures a company’s ability to control its operating expenses. Therefore, a high value of the ratio may indicate that the company manages its operating expenses more effectively than its peers.
Stock rotation: The ratio of 12-month cost of goods sold (COGS) to four-quarter average inventory is considered one of the most popular efficiency ratios. It indicates a company’s ability to maintain a proper inventory position. While a high value indicates that the company has a relatively low level of inventory compared to COGS, a low value indicates that the company is facing declining sales, which has resulted in excess inventory.
Receivables turnover: This is the ratio between sales over 12 months and average receivables over four quarters. It shows the potential for a business to extend its credit and collect debts based on that credit. A high receivables turnover ratio or “debtors turnover ratio” or “debtors turnover ratio” is desirable because it shows that the company is capable of collecting its receivables or that it has quality customers.
Use of assets: This ratio indicates a company’s ability to convert assets into production and is therefore a widely known measure of the level of efficiency. It is calculated by dividing total sales over the last 12 months by the average of the last four quarters of total assets. Like the ratios above, high asset utilization can indicate that a business is efficient.
Using these few criteria reduced the universe from more than 7,906 stocks to 21.
Here are the top three actions that crossed the screen:
AutoNation is the largest automotive retailer in the United States. AutoNation offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products and other aftermarket products. It has an average four-quarter earnings surprise of 27.4%.
AZZ is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly technical services to the power generation, transmission, distribution and industrial markets in the protection of metal and electrical systems used to build and improve global infrastructure. It has an average four-quarter earnings surprise of 22.3%.
Matador Resources is one of the leading oil and gas explorers in shale and unconventional resources in the United States. It has an average four-quarter earnings surprise of 25.2%.
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For the rest of this article on Screen of the Week, please visit Zacks.com at: https://www.zacks.com/stock/news/1915161/3-top-rated-efficient-stocks-to-add-to-your-portfolio
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Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
This company could rival or surpass other recent Zacks stocks which are expected to double like Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one year .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.