When considering investments at the large cap level, steady profits are a good first indicator that a company is doing well. Especially when their profits are consistently rising over time, and they are also generating income from their assets. Today we searched for companies of this nature. We then narrowed the field to include large cap stocks that have great growth projections. If these companies stay on target with their projections, they are set to increase their profitability. We think you will be intrigued by our findings.
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.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for large cap stocks. We then looked for businesses with strong profit margins (1-year operating margin>15%)(ROA>10%). From here, we then looked for companies that have high future earnings per share growth forecasts (5-year projected EPS Growth Rate>25%). We did not screen out any sectors.
Do you think these large-cap stocks have a strong outlook? Use our list, along with your own analysis.
1) Seagate Technology PLC (STX)
|Industry:||Data Storage Devices|
Seagate Technology PLC has a Operating Profit Margin of 20.81%, a Return on Assets of 29.61%, and a 5-Year Projected Earnings Per Share Growth Rate of 25.67%. The short interest was 9.37% as of 08/09/2012. Seagate Technology designs, manufactures, markets, and sells hard disk drives for enterprise, client computer, and client non-computer market applications worldwide. The company's products are used in enterprise servers, mainframes, and workstations; desktop and notebook computers; digital video recorders; personal data backup systems; portable external storage systems; and digital media systems. It also provides data storage services for small to medium-sized businesses, including online backup, data protection, and recovery solutions; and ships external backup storage solutions under its Free Agent Go and Free Agent Go Flex product lines.
2) Silver Wheaton Corp. (SLW)
Silver Wheaton Corp. has a Operating Profit Margin of 76.38%, a Return on Assets of 19.96%, and a 5-Year Projected Earnings Per Share Growth Rate of 36.50%. The short interest was 1.09% as of 08/09/2012. Silver Wheaton, a mining company, together with its subsidiaries, operates as a silver streaming company worldwide. The company has 14 long-term silver purchase agreements and 2 long-term precious metal purchase agreements, whereby it acquires silver and gold production from counterparties located in Mexico, the United States, Greece, Sweden, Per, Chile, Argentina, and Portugal.
3) Baidu, Inc. (BIDU)
|Industry:||Internet Information Providers|
Baidu, Inc. has a Operating Profit Margin of 51.33%, a Return on Assets of 39.76%, and a 5-Year Projected Earnings Per Share Growth Rate of 42.54%. The short interest was 1.82% as of 08/09/2012. Baidu provides Internet search services. The company offers Chinese and Japanese language search platforms on its Website, Baidu.com.
4) Alexion Pharmaceuticals, Inc. (ALXN)
Alexion Pharmaceuticals, Inc. has a Operating Profit Margin of 31.05%, a Return on Assets of 10.75%, and a 5-Year Projected Earnings Per Share Growth Rate of 37.72%. The short interest was 3.07% as of 08/09/2012. Alexion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the innovation, development, and commercialization of life-transforming therapeutic products for treating patients with severe and ultra-rare disorders in the United States, Europe, Latin America, Japan, and the Asia Pacific. It focuses on developing products for the treatment of diseases in the areas of hematology, nephrology, neurology, metabolic disorders, oncology, and ophthalmology. The company offers Soliris(eculizumab), a therapeutic product for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), a blood disorder; and atypical hemolytic uremic syndrome (aHUS), an ultra-rare and life-threatening genetic disease.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.