Do you prefer investing in companies with strong track records of growth, backed by continued profitability? If so, we ran a screen you might find interesting.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom-line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
We first looked for large-cap stocks. Next, we screened for businesses that analysts rate as "Strong Buy" (mean recommendation < 2). We then screened for businesses that have been able to retain strong profit margins on the bottom line (Net Margin [TTM]>10%)(1-year fiscal EPS growth rate>10%). We did not screen out any sectors.
Do you think these large-cap stocks will offer healthy returns? Use this list as a starting-off point for your own analysis.
1) Anheuser-Busch InBev (BUD)
|Industry:||Beverages - Brewers|
Anheuser-Busch InBev has a Analysts' Rating of 1.40, a Net Margin of 22.12%, and a Earnings Per Share Growth Rate of 45.16%. The short interest was 0.41% as of 06/20/2012. Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, marketing, and distribution of beer in Latin America, North America, Europe, and the Asia pacific. The company offers a portfolio of approximately 200 beer brands. Its global brands include Budweiser, Stella Artois, and Beck's; multi-country brands consist of Leffe and Hoegaarden; and local brands comprise Bud Light, Michelob, Skol, Brahma, Antarctica, Quilmes, Jupiler, Hasseroder, Klinskoye, Sibirskaya Korona, Chernigivske, Harbin and Sedrin.
2) Agilent Technologies Inc. (A)
|Industry:||Scientific & Technical Instruments|
Agilent Technologies Inc. has a Analysts' Rating of 1.50, a Net Margin of 16.27%, and a Earnings Per Share Growth Rate of 47.12%. The short interest was 1.28% as of 06/20/2012. Agilent Technologies, Inc. provides bio-analytical and electronic measurement solutions to the communications, electronics, life sciences, and chemical analysis industries worldwide. Its Electronic Measurement segment offers electronic measurement instruments and systems, and software design tools that are used in the design, development, manufacture, installation, deployment, and operation of electronics equipment and microscopy products. Its products consist of communications and general purpose test products.
3) Deutsche Bank AG (DB)
|Industry:||Foreign Regional Banks|
Deutsche Bank AG has an Analysts' Rating of 1.50, a Net Margin of 11.26%, and a Earnings Per Share Growth Rate of 47.11%. The short interest was 0.92% as of 06/20/2012. Deutsche Bank Aktiengesellschaft provides investment, financial, and related products and services. The company's Corporate and Investment Bank division engages in the origination, sale, structuring and trading of bonds, equities and equity-linked products, exchange-traded and over-the-counter derivatives, foreign exchange, money market instruments, securitized instruments, and commodities to sovereign countries and multinational organizations; and medium-sized companies and multinational corporations. It also offers mergers and acquisitions advisory, corporate finance, and transaction banking, as well as trade finance, and trust and securities services for financial institutions and other companies.
4) ICICI Bank Ltd. (IBN)
|Industry:||Foreign Regional Banks|
ICICI Bank Ltd. has a Analysts' Rating of 1.50, a Net Margin of 14.95%, and a Earnings Per Share Growth Rate of 17.04%. The short interest was 2.07% as of 06/20/2012. ICICI Bank Limited and its subsidiaries provide banking and financial services to corporate and retail customers in India and internationally. It offers commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking, and treasury products and services. The company provides current and savings accounts, fixed and recurring deposits, and salary accounts; credit and debit, prepaid, and corporate cards; and home, commercial vehicle, personal, car, and construction equipment loans, as well as loans against securities. It also offers life, travel, health, car, two wheeler, home, medical, motor, and general insurance products; demat accounts; and tax saving bonds, government of India bonds, initial public offerings, foreign exchange services, and senior citizens savings schemes, as well as gold for investment.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.