For immediate release
Chicago, Illinois – February 9, 2022 – The stocks in this week’s article are CommScope Holding Company, Inc. COMM, Microchip Technology Inc. MCHP, Qualcomm Inc. QCOM, CBRE Group, Inc. CBRE and Nucor Corp. NUDE.
5 ROE stocks to profit as intense volatility spooks markets
After a strong start to the year, growth in the US stock market appears to have slowed due to intense volatility. Soaring inflationary pressures driven by high crude oil prices continue to weigh on markets as a possible interest rate hike by the Fed looms.
Additionally, a sharp drop in some blue-chip tech stocks sent the broader indexes tumbling with a series of divergent quarterly performances. However, markets regained some lost ground, with the US economy adding 467,000 jobs in January, despite a surge in infections from the Omicron variant. Large-scale job additions across different sectors have portrayed relatively strong labor market conditions amid coronavirus-induced adversities.
While investors use a wait-and-see approach in a classic example of “support and fill” in the market, they can benefit from “cash cow” stocks that generate higher returns. However, identifying cash-rich stocks alone is not a strong investment proposition, unless it is backed by attractive efficiency ratios such as return on equity (ROE). A high ROE ensures that the company reinvests its cash at a high rate of return. CommScope Holding Company, Inc., Microchip Technology Inc., Qualcomm Inc., CBRE Group, Inc. and Nucor Corp. are some of the stocks with a high ROE to profit from.
ROE = Net income/Equity
ROE helps investors distinguish profit-generating companies from profit-burners and is useful in determining a company’s financial health. In other words, this financial metric allows investors to identify companies that diligently deploy cash for higher returns.
Additionally, ROE is often used to compare a company’s profitability to that of other companies in the industry – the higher the better. It measures how well a company multiplies its profits without investing new equity and depicts management’s effectiveness in rewarding shareholders with attractive risk-adjusted returns.
For the rest of this article on Screen of the Week, please visit Zacks.com at: https://www.zacks.com/stock/news/1864063/5-roe-stocks-to-profit-as-intense-volatility-spooks-markets
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