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How can you tell if a company has stronger profitability than its competitors? One idea is to use DuPont analysis of return on equity. With this idea in mind, we ran a screen.

We began by screening the tech sector for stocks that are rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have strong upward momentum.

Then to analyze these companies' profitability, we ran DuPont analysis on the names. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components:

ROE

= (Net Profit/Equity)

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

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

Because increases in net margin and asset turnover are considered good things, DuPont focuses on companies with these positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio)

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that these names are profitable.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these companies are highly profitable? Use this list as a starting point for your own analysis.

List sorted by distance above 200-day moving average.

1. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC): Provides software products and software-enabled services to the financial service providers worldwide. Market cap at $1.8B, most recent closing price at $23.74. The stock is currently trading 1.24% above its 20-day moving average, 1.69% above its 50-day MA, and 26.11% above its 200-day MA. MRQ net profit margin at 19.09% vs. 11.04% y/y. MRQ sales/assets at 0.077 vs. 0.069 y/y. MRQ assets/equity at 1.205 vs. 1.379 y/y.

2. TW Telecom Inc. (NASDAQ:TWTC): Provides managed network services to enterprise organizations and communication services companies in the United States. Market cap at $3.47B, most recent closing price at $23.03. The stock is currently trading 1.77% above its 20-day moving average, 4.16% above its 50-day MA, and 16.31% above its 200-day MA. MRQ net profit margin at 5.39% vs. 3.8% y/y. MRQ sales/assets at 0.133 vs. 0.125 y/y. MRQ assets/equity at 2.651 vs. 2.725 y/y.

3. Syntel, Inc. (NASDAQ:SYNT): Provides information technology and knowledge process outsourcing services worldwide. Market cap at $2.3B, most recent closing price at $54.90. The stock is currently trading 0.31% above its 20-day moving average, 0.02% above its 50-day MA, and 14.88% above its 200-day MA. MRQ net profit margin at 23.86% vs. 17.23% y/y. MRQ sales/assets at 0.265 vs. 0.255 y/y. MRQ assets/equity at 1.174 vs. 1.192 y/y.

4. CSG International, Inc. (NASDAQ:CSGS): Provides outsourced customer care and billing solutions primarily to the cable and direct broadcast satellite industry in North America. Market cap at $556.25M, most recent closing price at $16.37. The stock is currently trading 0.35% above its 20-day moving average, 6.28% above its 50-day MA, and 11.01% above its 200-day MA. MRQ net profit margin at 6.38% vs. 6.28% y/y. MRQ sales/assets at 0.225 vs. 0.225 y/y. MRQ assets/equity at 2.883 vs. 3.202 y/y.

5. Intuit Inc. (NASDAQ:INTU): Provides business and financial management solutions for small and medium-sized businesses, consumers, accounting professionals, and financial institutions in the United States, Canada, India, and the United Kingdom. Market cap at $16.35B, most recent closing price at $55.66. The stock is currently trading 3.47% above its 20-day moving average, 0.09% above its 50-day MA, and 6.57% above its 200-day MA. MRQ net profit margin at 37.74% vs. 37.23% y/y. MRQ sales/assets at 0.38 vs. 0.332 y/y. MRQ assets/equity at 1.805 vs. 1.973 y/y.

6. QAD Inc. (NASDAQ:QADA): Provides enterprise software applications, and related services and support for manufacturing companies. Market cap at $197.81M, most recent closing price at $12.48. The stock is currently trading 5.23% above its 20-day moving average, 2.42% above its 50-day MA, and 6.01% above its 200-day MA. MRQ net profit margin at 2.89% vs. 1.72% y/y. MRQ sales/assets at 0.316 vs. 0.294 y/y. MRQ assets/equity at 3.251 vs. 3.532 y/y.

7. Jack Henry & Associates Inc. (NASDAQ:JKHY): Provides integrated computer systems and services for in-house and outsourced data processing to commercial banks, credit unions, and other financial institutions primarily in the United States. Market cap at $2.86B, most recent closing price at $32.73. The stock is currently trading 1.64% above its 20-day moving average, 0.72% above its 50-day MA, and 3.91% above its 200-day MA. MRQ net profit margin at 14.3% vs. 13.77% y/y. MRQ sales/assets at 0.177 vs. 0.173 y/y. MRQ assets/equity at 1.475 vs. 1.63 y/y.

8. Shenandoah Telecommunications Co. (NASDAQ:SHEN): Provides regulated and unregulated telecommunications services to end-user customers and other communications providers in the southeastern United States. Market cap at $257.1M, most recent closing price at $10.78. The stock is currently trading 5.62% above its 20-day moving average, 3.82% above its 50-day MA, and 1.44% above its 200-day MA. MRQ net profit margin at 6.5% vs. 5.01% y/y. MRQ sales/assets at 0.146 vs. 0.13 y/y. MRQ assets/equity at 2.33 vs. 2.392 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 8 Rallying Tech Stocks With Strong Sources Of Profitability