At the large-cap level, it's easy to assume that many companies have already maxed out their growth potential. But some of the most successful companies of this size continue to be industry leaders by driving innovation, delving into new markets, and releasing new products. In search of companies that fall into this category, today we focused on large-cap stocks with strong track records of generating profits, and we further narrowed our list of candidates to include those that have, on average, 'Buy' or better ratings from analysts, which can signal that a company has many good qualities, such as effective management, in place. These two traits, impressive profits and analyst backing, point to a well run company. The list below provides you with a place to start your research process.
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.
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.
We first looked for large cap stocks. We then screened for businesses that have strong profitability (1-year fiscal EPS Growth Rate>10%)(ROE [TTM]>30%). From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.
Do you think these large-cap stocks have strong enough fundamentals to move higher? Please use our list to assist with your own analysis.
1) Deere & Company (DE)
|Industry||Farm & Construction Machinery|
|Earnings Per Share Growth Rate||52.34%|
|Return on Equity||40.83%|
Deere & Company provides products and services primarily for agriculture and forestry worldwide. Its Agriculture and Turf segment manufactures and distributes a line of farm and turf equipment, and related service parts, which include large, medium, and utility tractors; loaders; combines, corn pickers, cotton and sugarcane harvesters, and related front-end equipment and sugarcane loaders; tillage, seeding, and application equipment, such as sprayers, nutrient management, and soil preparation machinery; and hay and forage equipment comprising self-propelled forage harvesters and attachments, balers, and mowers. This segment also offers turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment; integrated agricultural management systems technology; precision agricultural irrigation equipment and supplies; landscape and nursery products; and other outdoor power products.
The company's Construction and Forestry segment provides a range of machines and service parts used in construction, earth=moving, material handling, and timber harvesting comprising backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; and log skidders, feller bunchers, log loaders, log forwarders, log harvesters, and related attachments. This segment markets its products and services primarily through independent retail dealer networks and retail outlets. Its financial services segment finances sales and leases of new and used agriculture and turf equipment, as well as construction and forestry equipment. This segment also provides wholesale financing to dealers of the foregoing equipment, offers operating loans, finances retail revolving charge accounts, and provides crop risk mitigation products and extended equipment warranties. The company was founded in 1837 and is based in Moline, Illinois.
2) priceline.com Incorporated (PCLN)
|Earnings Per Share Growth Rate||99.37%|
|Return on Equity||50.01%|
priceline.com Incorporated, together with its subsidiaries, operates as an online travel company. The company provides price-disclosed hotel reservation services on a worldwide basis with approximately 185,000 hotels and accommodations in 160 countries primarily under the Booking.com, priceline.com, and Agoda brand names; and price-disclosed rental car reservation services in approximately 4,000 locations worldwide through rentalcars.com name.
It also offers retail airline tickets, hotel room reservation, and rental car services through its Name Your Own Price demand-collection system, as well as vacation packages consisting of airfare, hotel, and rental car components; cruise trips; and destination services, including parking, event tickets, ground transfers, and tours in the United States.
In addition, the company provides an optional travel insurance package that provides coverage for trip cancellation, trip interruption, medical expenses, and emergency evacuation, as well as for loss of baggage, property, and travel documents for air, hotel, and vacation package customers; and collision damage waiver insurance for rental car customers in the United States. priceline.com Incorporated was founded in 1997 and is headquartered in Norwalk, Connecticut.
3) Rockwell Automation Inc. (ROK)
|Industry||Industrial Electrical Equipment|
|Earnings Per Share Growth Rate||57.02%|
|Return on Equity||38.86%|
Rockwell Automation, Inc. provides industrial automation power, control, and information solutions. It operates in two segments, Architecture and Software, and Control Products and Solutions. The Architecture and Software segment offers control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control, and machine safety control; and products comprising controllers, electronic operator interface devices, electronic input/output devices, communication and networking products, and industrial computers.
This segment also offers software products, such as configuration and visualization software used to operate and supervise control platforms, advanced process control software, and manufacturing execution software to enhance manufacturing productivity and meet regulatory requirements; and rotary and linear motion control products, and sensors and machine safety components.
The Control Products and Solutions segment provides low and medium voltage electro-mechanical and electronic motor starters, motor and circuit protection devices, AC/DC variable frequency drives, push buttons, signaling devices, termination and protection devices, relays and timers, and condition sensors; and packaged solutions, such as configured drives and motor control centers to automation and information solutions, as well as life-cycle support services.
The company sells its products, solutions, and services primarily under the Rockwell Automation, Allen-Bradley, A-B, and Rockwell Software brand names to the food and beverage, transportation, oil and gas, metals, mining, home and personal care, pulp and paper, and life sciences markets through independent distributors and direct sales force in the United States, Canada, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Rockwell Automation, Inc. was founded in 1928 and is headquartered in Milwaukee, Wisconsin.
4) Wynn Resorts Ltd. (WYNN)
|Industry||Resorts & Casinos|
|Earnings Per Share Growth Rate||277.79%|
|Return on Equity||41.83%|
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates two casino resort complexes in Las Vegas, the Wynn Las Vegas and Encore at Wynn Las Vegas with approximately 4,750 hotel rooms and suites; 220 table games; 2,430 slot machines; and 1 poker room in approximately 186,000 square feet of casino gaming space, including a sky casino and private gaming salons; 35 food and beverage outlets; 2 spas and salons; lounges; and approximately 97,000 square feet of retail space featuring various boutiques. Its Las Vegas resorts also offer 3 nightclubs; 1 beach club; 1 Ferrari and Maserati automobile dealership; wedding chapels; golf course; approximately 283,000 square feet of meeting space; 1 theater; and 1 Encore Theater.
In addition, the company operates Wynn Macau casino resort and Encore at Wynn Macau resort located in the Macau Special Administrative Region of the People's Republic of China. Its Macau resorts feature approximately 1,008 hotel rooms and suites; 486 table games; 930 slot machines; and 1 poker pit in approximately 265,000 square feet of casino gaming space, including 1 sky casino and private gaming salons; 8 restaurants; 2 spas and 1 salon; lounges; meeting facilities; and approximately 54,200 square feet of retail space featuring various boutiques, as well as a show in the rotunda. Wynn Resorts, Limited was founded in 2002 and is based in Las Vegas, Nevada.
5) Caterpillar Inc. (CAT)
|Earnings Per Share Growth Rate||78.22%|
|Return on Equity||40.75%|
Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. It offers backhoe, skid steer, multi-terrain, track-type, and wheel loaders; track, wheel, and mini excavators; select work tools; track-type tractors; motor graders; pipelayers; and related parts for the heavy construction, general construction, mining and quarry, and aggregates markets.
The company also provides electric rope and hydraulic shovels, mining trucks, wheel dozers, draglines, electric drive mining trucks, compactors, tunnel boring and underground mining equipment, drills, forestry products, highwall miners, off-highway and articulated trucks, paving products, wheel tractor scrapers, electronics and control systems, and machinery components for mine, quarry, forestry, paving, and tunneling applications. In addition, it offers reciprocating engine powered generator sets; integrated systems for the electric power generation industry; reciprocating engines and integrated systems and solutions for the marine and petroleum industries, and industrial applications; turbines and turbine-related services; and diesel-electric locomotives and components, and other rail-related products and services.
Further, the company provides retail financing for its equipment, machinery, and engines, as well as for vehicles, power generation facilities, and marine vessels that incorporate its products; wholesale financing to its dealers and customers; and insurance services. Additionally, it offers component manufacturing, remanufacturing, and logistics services, as well as distributes other companies' products. Caterpillar Inc. markets its products through its sales force, distribution centers, dealers, and distributors. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar Inc. was founded in 1925 and is headquartered in Peoria, Illinois.
6) Cummins Inc. (CMI)
|Earnings Per Share Growth Rate||80.95%|
|Return on Equity||34.17%|
Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products worldwide. It operates in four segments: Engine, Components, Power Generation, and Distribution. The Engine segment offers a range of diesel and natural gas powered engines under the Cummins and other customer brand names for the heavy-and medium-duty truck, bus, recreational vehicle, light-duty automotive, agricultural, construction, mining, marine, oil and gas, rail, and governmental equipment markets. This segment also provides new parts and service, as well as remanufactured parts and engines.
The Components segment supplies filtration products, turbochargers, aftertreatment systems, intake and exhaust systems, and fuel systems for commercial diesel applications. This segment offers filtration and exhaust systems for on-and off-highway heavy-duty and mid-range equipment, as well as supplies filtration products for industrial and passenger car applications. This segment also develops after treatment and exhaust systems to help customers meet emissions standards and fuel systems.
The Power Generation segment designs and manufactures components that make up power generation systems, including engines, controls, alternators, transfer switches, and switchgear. This segment also offers power generation systems, components, and services, including diesel, natural gas, gasoline, and alternative-fuel electrical generator sets for use in recreational vehicles, commercial vehicles, recreational marine applications, and home stand-by or residential applications.
The Distribution segment provides parts and services, as well as service solutions, including maintenance contracts, engineering services, and integrated products. The company sells its products to original equipment manufacturers, distributors, and other customers. Cummins Inc. was founded in 1919 and is headquartered in Columbus, Indiana.
7) Dish Network Corp. (DISH)
|Earnings Per Share Growth Rate||53.85%|
|Return on Equity||3163.89%|
DISH Network Corporation, together with its subsidiaries, provides direct broadcast satellite subscription television services in the United States. It offers programming, including approximately 230 basic video channels, 60 Sirius satellite radio music channels, 30 premium movie channels, 35 regional and specialty sports channels, 3,200 local channels, 275 Latino and international channels, and 70 channels of pay-per-view content. The company also provides local channels in standard definition in approximately 210 TV markets and local channels in HD in approximately 170 markets; and receiver systems comprising a small satellite dish, digital set-top receivers, and remote controls.
In addition, it operates DISHOnline.com, which offers DISH subscribers to watch 270,000 movies, television shows, clips, and trailers; and offers DISH Remote Access that enables subscribers to remotely control their DVRs using compatible mobile devices, such as smartphones, tablets, laptops, and home computers. Further, the company provides Blockbuster@Home that offers movies, games, and TV shows through Internet streaming, mail and in-store exchanges, and online to DISH subscribers. As of December 31, 2011, it served 13.967 million customers.
The company provides its receiver systems and programming services through direct sales channels; and independent third parties, which include small satellite retailers, direct marketing groups, local and regional consumer electronics stores, nationwide retailers, and telecommunications companies. DISH Network Corporation was founded in 1980 and is headquartered in Englewood, Colorado.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/23/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.