Mid cap companies are an interesting investment: they offer some of the growth potential of smaller cap companies, yet they can lack some of the stability of larger cap alternatives. Today we focused on mid cap companies in the consumer space that have records of consistently returning profits to shareholders, and that have gained analyst recommendations. Keeping these ideas in mind, we ran a screen.
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.
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 mid cap consumer stocks. We then looked for businesses that have been able to maintain a sound level of profitability for shareholders (ROE [TTM]>30%)(ROA > 10%). From here, we then looked for companies that analysts rate as "Buy" (2 < mean recommendation < 3).
Do you think these mid-cap stocks have a positive future in store? Use this list as a starting-off point for your own analysis.
1) TRW Automotive Holdings Corp. (NYSE:TRW)
TRW Automotive Holdings Corp. has a Return on Equity of 38.20%, a Return on Assets of 10.72%, and a Analysts' Rating of 1.80. The short interest was 2.89% as of 07/02/2012. TRW Automotive Holdings Corp., together with its subsidiaries, designs, manufactures, and sells automotive systems, modules, and components for automotive original equipment manufacturers (OEM) and related aftermarkets. It operates in four segments: Chassis Systems, Occupant Safety Systems, Electronics, and Automotive Components. The Chassis Systems segment offers product lines relating to steering gears and systems, foundation brakes, modules, brake controls, and linkage and suspension.
2) WABCO Holdings Inc. (NYSE:WBC)
WABCO Holdings Inc. has a Return on Equity of 54.67%, a Return on Assets of 20.07%, and a Analysts' Rating of 1.90. The short interest was 1.80% as of 07/02/2012. WABCO Holdings Inc., together with its subsidiaries, provides electronic, mechanical, and mechatronic products for commercial truck, trailer, bus, and passenger car manufacturers worldwide. The company develops, manufactures, and sells braking, stability, suspension, and transmission control systems primarily for commercial vehicles. Its products include pneumatic anti-lock braking systems, electronic braking systems, automated manual transmission systems, and air disk brakes; and various conventional mechanical products, such as actuators, air compressors, and air control valves for heavy-and medium-sized trucks, trailers, and buses.
3) Tupperware Brands Corporation (NYSE:TUP)
|Industry:||Packaging & Containers|
Tupperware Brands Corporation has a Return on Equity of 32.29%, a Return on Assets of 11.29%, and a Analysts' Rating of 2.20. The short interest was 1.08% as of 07/02/2012. Tupperware Brands Corporation operates as a direct seller of various products across a range of brands and categories through an independent sales force worldwide. It engages in the manufacture and sale of preparation, storage, and serving solutions for the kitchen and home, as well as a line of kitchen cookware and tools, microwave products, microfiber textiles, and gifts under the Tupperware brand name. The company also manufactures and distributes beauty and personal care products, including skin care products, cosmetics, bath and body care, toiletries, fragrances, and nutritional products under the Armand Dupree, Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, and Nuvo brands.
4) Polaris Industries, Inc. (NYSE:PII)
Polaris Industries, Inc. has a Return on Equity of 51.22%, a Return on Assets of 21.08%, and a Analysts' Rating of 1.80. The short interest was 5.50% as of 07/02/2012. Polaris Industries Inc., together with its subsidiaries, engages in designing, engineering, manufacturing, and marketing off-road vehicles, snowmobiles, and on-road vehicles primarily in the United States, Canada, and Europe. Its off-road vehicles include all-terrain vehicles and side-by-side vehicles for recreational and utility use; snowmobiles consisting of various models, including independent front suspension, long travel rear suspension, hydraulic disc brakes, liquid cooling for brakes, and a three cylinder engine, as well as a four-stroke engine; and on-road vehicles comprise V-twin cruiser motorcycles. The company also produces replacement parts and accessories, such as winches, bumper/brushguards, plows, racks, mowers, tires, pull-behinds, cabs, cargo box accessories, tracks, and oil for off-road vehicles; covers, traction products, reverse kits, electric starters, tracks, bags, windshields, oil, and lubricants for snowmobiles; and saddle bags, handlebars, backrests, exhaust, windshields, seats, oil, and various chrome accessories for motorcycles.
*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.