Don't rule out large cap stocks just because of their size. Smart investors know that there are hidden opportunities with companies in this range. They have grown to this level due to having core components in place: management, funding, profitability, and a commitment to their goals. Today we present a short list of highly profitable companies that are expected to continue their upward growth trajectory. Take a look and see if any spark your curiosity.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
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.
We first looked for large cap stocks. From here, we then looked for companies that are considered high-growth, with 1-year projected EPS growth above 25%. We then looked for businesses that have been able to maintain a sound level of profitability for shareholders (ROE [TTM]>30%)(1-year operating margin>15%). We did not screen out any sectors.
Do you think these large-cap stocks have strong operations? Use our list to help with your own analysis.
1) Baidu, Inc. (BIDU)
|Industry:||Internet Information Providers|
Baidu, Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 38.91%, a Return on Equity of 55.74%, and a Operating Profit Margin of 51.89%. The short interest was 1.43% as of 07/28/2012. Baidu, Inc. provides Internet search services. The company offers a Chinese language search platform on its Website, Baidu.com; and a Japanese language search platform on its Website, Baidu.
2) Continental Resources Inc. (CLR)
|Industry:||Independent Oil & Gas|
Continental Resources Inc. has a 1-Year Projected Earnings Per Share Growth Rate of 28.96%, a Return on Equity of 30.90%, and a Operating Profit Margin of 52.82%. The short interest was 11.19% as of 07/28/2012. Continental Resources, Inc. engages in the exploration, development, and production of crude oil and natural gas primarily in the north, south, and east regions of the United States. The company primarily sells its oil and natural gas production to end users, as well as to midstream marketing companies or oil refining companies at the lease. As of December 31, 2011, its estimated proved reserves were 508.
3) British American Tobacco plc (BTI)
British American Tobacco plc has a 1-Year Projected Earnings Per Share Growth Rate of 36.28%, a Return on Equity of 35.63%, and a Operating Profit Margin of 30.66%. The short interest was 0.02% as of 07/28/2012.
*Company profiles were sourced from Yahoo/Google Finance. 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.