Financial stocks can be risky, depending on the company's management and the global economic outlook. One way to hone in on winning companies is to look for those that not only have strong records of profitability, but ones that industry analysts also recommend. Keeping these ideas in mind, we ran a screen and came up with a pretty interesting list.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
We first looked for financial stocks. Next, we then screened for businesses with strong profit margins (1-year operating margin>15%)(ROA > 10%). We then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any market caps.
Do you think these stocks are worth more than the market currently says? Use our screened list as a starting point for your own analysis.
1) Cohen & Steers Inc. (CNS)
Cohen & Steers Inc. has a Operating Profit Margin of 37.97%, a Return on Assets of 20.22%, and a Analysts' Rating of 2.40. The short interest was 14.81% as of 07/01/2012. Cohen & Steers, Inc., together with its subsidiaries, provides investment management services to individual and institutional investors in the United States, Japan, and internationally. The company focuses on global real estate securities, global listed infrastructure, real assets, large cap value stocks, and preferred securities. It manages institutional accounts, open-end mutual funds, and closed-end mutual funds.
2) MarketAxess Holdings Inc. (MKTX)
|Industry:||Investment Brokerage - National|
MarketAxess Holdings Inc. has a Operating Profit Margin of 44.53%, a Return on Assets of 17.44%, and a Analysts' Rating of 1.80. The short interest was 2.73% as of 07/01/2012. MarketAxess Holdings Inc., through its subsidiaries, operates an electronic trading platform that allows investment industry professionals to trade corporate bonds and other types of fixed-income instruments. The company's trading platform allows institutional investor clients to request competitive, executable bids, or offers from multiple broker-dealers simultaneously, as well as to execute trades with the broker-dealer of their choice.
3) American Capital, Ltd. (ACAS)
American Capital, Ltd. has a Operating Profit Margin of 51.81%, a Return on Assets of 18.03%, and a Analysts' Rating of 2.30. The short interest was 2.51% as of 07/01/2012. American Capital, Ltd. is a private equity and venture capital firm specializing in management and employee buyouts, mezzanine, acquisition, recapitalization, middle market, and growth capital investments. The firm seeks to invest in senior debt mezzanine and equity financing for buyouts of private equity firms and direct in private and public companies. It also invests in special situations and in government.
4) Franklin Resources Inc. (BEN)
Franklin Resources Inc. has a Operating Profit Margin of 36.45%, a Return on Assets of 13.72%, and a Analysts' Rating of 2.40. The short interest was 3.41% as of 07/01/2012. Franklin Resources Inc. is a publicly owned asset management holding company. The firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It manages, through its subsidiary, separate client-focused equity, fixed income, and balanced portfolios.
5) SEI Investments Co. (SEIC)
SEI Investments Co. has a Operating Profit Margin of 21.13%, a Return on Assets of 14.89%, and a Analysts' Rating of 2.10. The short interest was 0.47% as of 07/01/2012. SEI Investments Co. is a publicly owned investment manager. The firm provides wealth management and investment advisory services to its clients through its subsidiaries. Through its subsidiaries, it provides its services to corporations, financial institutions, financial advisors, high net worth families, banks and trust institutions, investment advisors, financial planners, not-for-profit organizations, and pension plans.
6) World Acceptance Corp. (WRLD)
World Acceptance Corp. has a Operating Profit Margin of 29.60%, a Return on Assets of 14.37%, and a Analysts' Rating of 1.80. The short interest was 34.04% as of 07/01/2012. World Acceptance Corporation engages in small-loan consumer finance business. The company's products include short-term and medium-term loans, as well as related credit insurance, and ancillary products and services to individuals. It primarily offers consumer installment loans. The company also provides income tax return preparation and electronic filing services.
7) W. P. Carey & Co. LLC (WPC)
|Industry:||Real Estate Development|
W. P. Carey & Co. LLC has a Operating Profit Margin of 49.96%, a Return on Assets of 10.25%, and a Analysts' Rating of 1.00. The short interest was 0.17% as of 07/01/2012. W. P. Carey & Co. LLC, together with its subsidiaries, provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. It invests primarily in commercial properties that are each triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. The company also operates as an advisor to publicly owned, non-actively traded real estate investment trusts, which are sponsored by it under the Corporate Property Associates brand name, as well as invests in similar properties.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.