Bet On DuPont To Buy 5 Top-Rated Healthy Stocks – November 22, 2021


Return on equity (ROE) is one of the most popular metrics for investors. It is a profitability ratio that measures the profits a business generates from its equity. Investors can follow a company’s ROE trend and compare it to historical or sector benchmarks to choose a winning stock.

However, going beyond basic ROE and analyzing it at an advanced level could lead to even better returns. This is where DuPont analysis comes in. It is an analytical method that examines three major elements – operational management, asset management and capital structure – related to a company’s financial position. business. Below we show how DuPont breaks down ROE into its different components:

ROE = Net income / Equity

Net income / Equity = (Net income / Sales) * (Sales / Assets) * (Assets / Equity)

ROE = Profit margin * Asset turnover ratio * Equity multiplier

Sanderson Farms (SAFM Free Report), Pool Corp. (BOWL Free Report), Casey’s General Stores (CASY Free Report), Global Industrial Company (GIC Free report) and Landstar System (LSTR Free Report) are some of the winning actions selected on the basis of the above criteria.

Why use DuPont?

Although the importance of the normal ROE calculation cannot be overlooked, the fact remains that it does not always give the complete picture. DuPont analysis, on the other hand, allows investors to assess which elements play a dominant role in any change in ROE. This can help investors separate companies with higher margins from those with high turnover. For example, high-end fashion brands typically survive on a high margin compared to retail products, which rely on higher revenue.

And one of the components of ROE – the Equity Multiplier (explained below) – can help you gauge how burdened with debt a business is. A high ROE could be due to overuse of debt. Thus, the strength of a business can be misleading if it is heavily indebted.

Thus, an investor confined only to an ROE prospect may be confused if he has to judge between two equities of equal ratio. This is where DuPont analysis wins and finds the best stock.

Investors can simply do this analysis by looking at a company’s financial data. However, looking at each company’s financial statements separately can be a tedious task. Selection tools like Zacks Research Wizard can come to your rescue and help you pre-select stocks that look impressive with DuPont analysis.

Screening parameters

• Profit margin greater than or equal to 3: As the name suggests, this is a measure of the company’s profitability. In general, this is the main contributor to ROE.

• Asset turnover ratio greater than or equal to 2: It allows an investor to assess the effectiveness of management in using assets to drive sales.

• Equity multiplier between 1 and 3: It is an indication of the amount of debt that the company uses to finance its assets.

• Zacks Rank less than or equal to 2: Stocks with a Zacks # 1 (Strong Buy) or 2 (Buy) rank generally perform better than their peers in all types of market environment.

• Current price above $ 5: This filters out low-cost stocks. However, when looking for cheaper stocks, this criterion can be removed.

Here are five of the 17 actions that crossed the screen:

Sanderson Farms: This Zacks Rank # 1 is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. You can see The full list of today’s Zacks # 1 Rank stocks here.

Sanderson Farms has diversified its offerings to meet the changing preferences of consumers, who are looking for more health and wellness products.

Pool company: It is the world’s largest wholesale distributor of swimming pool supplies, equipment and related products. The stock carries a Zacks Rank # 1.

Pool reports its operations under two segments – the Base Business segment (95.6% of revenue for the third quarter of 2021) and the Excluded segment, i.e. sales centers excluded from Base Business (4 , 4%).

Casey’s General Stores: The company operates convenience stores under the names of Casey’s and Casey’s General Store in 16 Midwestern states, primarily Iowa, Missouri and Illinois. The stock has a Zacks Rank # 2.

Casey’s General Store offers a selection of foods (including freshly prepared foods such as pizzas, donuts and sandwiches), beverages, tobacco and nicotine products, health and beauty products, school supplies, household items and pet supplies.

Global industrial company:Global Industrial Company, through its operating subsidiaries, is a supplier of industrial products primarily to North America. GIC has a Zacks # 2 rank.

Global Industrial Company, formerly known as Systemax Inc., is based in New York City.

Landstar System:Zacks Rank # 2 Landstar System, Inc. is a lightweight provider of integrated transportation management solutions, incorporated in 1991. Headquartered in Jacksonville, Florida, the company provides services to the United States, Canada, Mexico as well as in other countries of North America.

Landstar System provides secure and specialized transportation services to a wide range of customers using a network of over 1,200 independent commission sales agents as well as over 66,000 third-party capacity owners.

You can get the rest of the stocks on this list by signing up now for your 2 week free trial of the Research Assistant and start using this screen in your own trading. In addition, you can also create your own strategies and test them out before you get into investing.

The Research Assistant is a great place to start. It’s easy to use. Everything is in plain language. And it’s very intuitive. Start your research assistant trial today. And the next time you read an economic report, open the research assistant, plug in your findings, and see what gems come out of 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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