Find strong stocks for 2022 with a return on equity


TThe market rebounded sharply on Tuesday as investors pushed the S&P 500 above its 50-day moving average. The level has been breached three times in the past month, with investors buying the downside each time. The highly technological Nasdaq is also about to rise above its 50 days.

Much of yesterday’s sales were hung on another round of major lockdowns in parts of Europe. Fortunately for the economy and the market, President Biden addressed the country on Tuesday afternoon, focusing on stepping up home testing and helping potentially overburdened hospitals.

Buying started to ramp up by mid-morning as it became clear that sweeping lockdowns in the United States were not on the table. Along with new covid fears, the market expected a more general slowdown and Wall Street used the end of the year to earn profits and lead other portfolio management efforts.

Despite a more volatile fourth quarter, the Nasdaq is still up 18% this year, with the S&P 500 up 24%. Additionally, the overall earnings and interest rate environment is bullish for US stocks next year, even in the face of rate hikes.

With that in mind, some investors might want to add to their portfolios for 2022. Today we used a Zacks screen to help find top stocks that have been proven to turn assets into profits …

DEER

Return on equity, or ROE, helps investors understand whether a company’s executives are creating assets with investor money or burning it. ROE shows a company’s ability to turn assets into profits. In other words, this vital metric measures the profit made for every dollar of equity.

ROE is calculated in net income / equity. For example: if $ 0.10 of assets are created for every $ 1 of shareholders’ equity, that would equate to an ROE of 10%.

Overall, ROE is a great element to use regardless of what type of investor you are, as it provides insight into management’s ability to create value and keep costs under. control. Additionally, if the ROE slips, it can alert us to potential issues.

With that said, let’s take a look at the settings on this screen and see companies prove that they can deliver shareholder value instead of spending their cash …

• Zacks rank equal to 1

The Zacks Rank examines upward revisions to earnings estimates, among other metrics, to find companies that should see their profits improve. In fact, starting with a Zacks Rank # 1 can be a great place to start as he’s showing an average annual return of over 25% per year over the past 30 years.

• Price greater than or equal to 5

Today we have ruled out all stocks that trade below $ 5 per share, as they can be more volatile and speculative.

• Price / sale ratio less than or equal to 1

In addition to that, we are looking for a low price / sales ratio. Today we went for 1 or less as this range is generally considered to offer better value as investors pay less for each unit sold.

•% (Broker) Strong Buy Note equal to 100 (%)

In this screen we have decided to go with companies that brokers strongly agree with, as the ratings are typically heavily biased towards “buy” and “strong buy”.

• ROE greater than or equal to 10

Last but not least for today’s screen, we got rid of all companies with ROE less than 10 because the median ROE for all stocks in the Zacks universe is lower. to 10.

Here are two of the dozens of actions that hit the screen today …

Citi Trends CTRN

Citi Trends, Inc. is a growing specialty retailer of clothing, accessories and home trends. Citi Trends boasts of selling “for a lot less expense, primarily to African American and Latin families in the United States.”

Citi Trends currently operates approximately 600 stores in 33 states. CTRN’s third-quarter revenue soared 14.5% and its adjusted profit soared to $ 1.03 per share, which helped it crush our estimate of EPS. In addition, Citi Trends’ gross margin was 40.3%. In addition, the Citi Trends Board of Directors has approved a new $ 30 million share buyback program.

Bluegreen Vacations Holding Corporation BVH

Bluegreen Vacations is one of the leading vacation ownership companies. Bluegreen Vacations markets and sells Vacation Ownership Interests (“VOIs”) and operates resorts in popular leisure and urban destinations.

Bluegreen Vacations has beaten our Zacks adjusted earnings estimates over the past four quarters, with an average pace of 695%. Bluegreen Vacations is expected to post a huge return year in 2021 and then follow it with higher revenue and profits in 2022.

Get the rest of the stocks on this list and start looking for the most recent companies that match those criteria. It is easy to do. And it might help you find your next big winner. Start researching these companies today with a free trial of the Search Assistant. You can do it.

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Disclosure: Officers, directors and / or employees of Zacks Investment Research may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document. An affiliated investment advisory firm may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document.

Disclosure: Information on the performance of Zacks’ portfolios and strategies can be found at: https://www.zacks.com/performance/

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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