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Return on equity is a financial metric that gauges a firm’s ability and efficiency relative to generating profits solely from shareholders equity. One benefit of a high ROE ratio is that reinvested earnings allow a firm to attain a higher growth rate. This metric also breaks a firm down into components, which allows investors to see where a firm may be potentially underperforming or overly reliant on something.

We ran a screen for large cap stocks that have underperformed the S&P 500 over the last month. From this narrowed pool we then screened for firms that have a return on equity (TTM) of at least 15% or higher.

The 1-Month Return ranks the firms worst to least worst relative to performance:

1.
Hewlett-Packard Co (HPQ)

Sector

Technology

Industry

Computer Systems

Market Cap

$46,980M

Beta

1.10

The company offers a wide variety of technology services and hardware all over of the world. The firm has fallen 28.16% in the last month. HPQ has a ROE of 21.71%. The short interest was 1.20% as of 08/15/2011.

2. UBS AG (UBS)

Sector

Financial Services

Industry

Banks - Global

Market Cap

$45,487M

Beta

1.73

The company offers a variety of asset management and private banking services worldwide. The firm has fallen 19.36% in the last month. UBS has a ROE of 15.95%. The short interest was N/A as of 08/15/2011.

3. Yanzhou Coal Mining Company Li (YZC)

Sector

Basic Materials

Industry

Coal

Market Cap

$13,245M

Beta

2.48

The company mines and sells coal and coal products. The firm has fallen 17.62% in the last month. YZC has a ROE of 33.39%. The short interest was N/A as of 08/15/2011.

4. ABB, Ltd. (ABB)

Sector

Industrials

Industry

Diversified Industrials

Market Cap

$41,429M

Beta

1.48

The company offers products for electricity grids to become more energy efficient. The firm has fallen 17.32% in the last month. ABB has a ROE of 20.13%. The short interest was N/A as of 08/15/2011.

5. General Motors Co (GM)

Sector

Consumer Cycle

Industry

Auto Manufacturers

Market Cap

$33,984M

Beta

N/A

The company sells cars, trucks, and parts all over the world. The firm has fallen 14.80% in the last month. GM has a ROE of 29.24%. The short interest was 7.70% as of 08/15/2011.

6. Infosys Ltd (INFY)

Sector

Technology

Industry

Information Technology Services

Market Cap

$26,951

Beta

1.10

The company offers a variety of technology based end-to-end business solutions. The firm has fallen 14.67% in the last month. INFY has a ROE of 27.10%. The short interest was N/A as of 08/15/2011.

7. NetApp, Inc. (NTAP)

Sector

Technology

Industry

Data Storage

Market Cap

$13,145M

Beta

1.45

The company offers data management solutions. The firm has fallen 14.48% in the last month. NTAP has a ROE of 19.83%. The short interest was 4.50% as of 08/15/2011.

8. Netflix, Inc. (NFLX)

Sector

Consumer Cyclical

Industry

Specialty Retail

Market Cap

$10,716M

Beta

0.40

The firm has fallen 14.23% in the last month. NFLX has a ROE of 83.62%. The short interest was 16.40% as of 08/15/2011. Given the short interest the firm may be short favorite or potentially a great short squeeze.

9. Wipro, Ltd. (WIT)

Sector

Technology

Industry

Information Technology Services

Market Cap

$22,212M

Beta

1.80

The company offers a comprehensive database of movies and TV through multiple points of distribution. The firm has fallen 13.97% in the last month. N/A has a ROE 24.31%. The short interest was N/A as of 08/15/2011.

10. Aflac Inc (AFL)

Sector

Financial Services

Industry

Insurance - Life

Market Cap

$15,804M

Beta

1.99

The company is a holding firm that operates subsidiaries with a focus on life and supplemental health insurance. The firm has fallen 13.83% in the last month. AFL has a ROE of 16.36%. The short interest was 1.40% as of 08/15/2011.

We hope this list helps as investors with their own due diligence on large cap stocks.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 10 Oversold Large Cap Stocks