7 Low-Debt, High-Profit Large Cap Stocks

by: ZetaKap

Most of us are familiar with the phrase built to last. This idea resonates with most investors when they consider which companies will bring in solid returns. Investors want to align with companies that have solid foundations and sustainable business models. For our scan today, we focused on the large cap arena as companies of this size have already experienced and overcome numerous developmental phases. Two traits that speak to endurance and strength are healthy debt ratios and strong earnings. By not leaning heavily on debt to fund growth and maintaining profitability from assets and efficiency, these companies have a solid grip on the finances and operations. If stocks of this nature appeal to you, then you will like our list of large caps below.

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.

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

The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

We first looked for large cap stocks. Next, we then screened for businesses with strong profitability (ROA > 10%)(Net Margin [TTM]>10%). We then screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We then screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). We did not screen out any sectors.

Do you think these large-cap stocks have a strong outlook? Please use our list to assist with your own analysis.

1) T. Rowe Price Group, Inc. (NASDAQ:TROW)

Sector Financial
Industry Asset Management
Market Cap $15.94B
Beta 1.61

TROW stock chart

Key Metrics

Return on Assets 19.46%
Net Margin 27.63%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 1.53%

T. Rowe Price Group, Inc. is a publicly owned asset management holding company. The firm primarily provides its services to individual and institutional investors, retirement plans, and financial intermediaries. T. Rowe Price Group was founded in 1937 and is based in Baltimore, Maryland with additional offices in London, United Kingdom; Central Hong Kong, Hong Kong; Tokyo, Japan; and Singapore.

2) Intuitive Surgical, Inc. (NASDAQ:ISRG)

Sector Healthcare
Industry Medical Appliances & Equipment
Market Cap $20.41B
Beta 1.62

ISRG stock chart

Key Metrics

Return on Assets 18.23%
Net Margin 28.96%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 4.94%

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its da Vinci surgical system consists of a surgeon's console or consoles, a patient-side cart, a 3-D vision system, Firefly fluorescence imaging product, da Vinci skills simulator, and proprietary wristed' instruments. The company was founded in 1995 and is headquartered in Sunnyvale, California.

3) Novo Nordisk A/S (NYSE:NVO)

Sector Healthcare
Industry Drug Manufacturers - Other
Market Cap $72.87B
Beta 0.54

NVO stock chart

Key Metrics

Return on Assets 30.86%
Net Margin 26.30%
Long Term Debt/Equity Ratio 0.02
Debt/Equity Ratio 0.03
Short Interest 0.35%

Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products in Denmark and internationally. The company operates in two segments, Diabetes Care and Biopharmaceuticals. The company was founded in 1925 and is headquartered in Bagsvaerd, Denmark.

4) Cognizant Technology Solutions Corporation (NASDAQ:CTSH)

Sector Technology
Industry Business Software & Services
Market Cap $21.36B
Beta 1.23

CTSH stock chart

Key Metrics

Return on Assets 18.22%
Net Margin 14.22%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 1.09%

Cognizant Technology Solutions Corporation provides information technology, consulting, and business process outsourcing services in North America, Europe, and internationally. Its IT consulting and technology services include business and knowledge process consulting; IT strategy consulting; program management consulting; technology consulting; application design, development, integration, and re-engineering, such as complex custom systems development, data warehousing/business intelligence, customer relationship management system implementation, and enterprise resource planning system implementation; and software testing services. Cognizant Technology Solutions Corporation was founded in 1998 and is headquartered in Teaneck, New Jersey.

5) Mastercard Incorporated (NYSE:MA)

Sector Services
Industry Business Services
Market Cap $59.13B
Beta 0.91

MA stock chart

Key Metrics

Return on Assets 20.87%
Net Margin 29.69%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 1.09%

MasterCard Incorporated, a payments and technology company, together with its subsidiaries, provides transaction processing and other payment-related services in the United States and internationally. Its payment solutions include payment programs, product development, payment processing technology, payment security, consulting, and information services and marketing. MasterCard Incorporated was founded in 1966 and is headquartered in Purchase, New York.

6) Infosys Ltd. (NASDAQ:INFY)

Sector Technology
Industry Technical & System Software
Market Cap $28.28B
Beta 1.24

INFY stock chart

Key Metrics

Return on Assets 24.51%
Net Margin 24.71%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 4.55%

Infosys Technologies Limited, a technology services company, defines, designs, and delivers information technology enabled business solutions. The company, together with its subsidiaries, provides various services, including business consulting, package enabled consulting and implementation, custom application development, maintenance and production support, technology consulting, business process management and solutions, product engineering solutions, infrastructure maintenance services, validation solutions, and systems integration services.The company was founded in 1981. It was formerly known as Infosys Consultants Private Limited and changed its name to Infosys Technologies Private Limited in April 1992. Further, it changed its name to Infosys Technologies Limited in June 1992. The company is headquartered in Bangalore, India.

7) Coach, Inc. (NYSE:COH)

Sector Consumer Goods
Industry Textile - Apparel Footwear & Accessories
Market Cap $16.04B
Beta 1.56

COH stock chart

Key Metrics

Return on Assets 36.20%
Net Margin 21.81%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.01
Short Interest 6.06%

Coach, Inc. engages in the design, marketing, and distribution of handbags, accessories, wearables, footwear, jewelry, sunwear, travel bags, watches, and fragrances for women and men in the United States and internationally. The company offers women handbags, as well as business cases, computer bags, messenger-style bags, and totes for men. Its accessories comprise small leather goods consisting of money pieces, wristlets, and cosmetic cases for women, as well as wallets and card cases for men; novelty accessories comprising time management and electronic accessories, key rings, and charms; and belts. Coach, Inc. was founded in 1941 and is headquartered in New York, New York.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/04/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.