Zacks.com featured highlights Jabil, PepsiCo, DICK'S Sporting Goods, Hologic and Suzano
For Immediate Release
Chicago, IL – January 12, 2023 – Stocks in this week’s article are Jabil Inc. JBL, PepsiCo, Inc. PEP, DICK'S Sporting Goods, Inc. DKS, Hologic, Inc. HOLX and Suzano S.A. SUZ.
5 Stocks with High ROE to Buy as Rate Hike Fears Subside
The U.S. equity markets inched up in the past few trading sessions as the December jobs report and contraction in the services sector instilled hopes that inflation was cooling. The latest nonfarm payrolls report showed that the U.S. economy added 223,000 jobs in December compared with broad-based expectations of 200,000 job additions, while wages increased 0.3%, contrary to expectations of a 0.4% rise. The ISM Services index recorded a reading of 49.6% for December, portraying contraction amid a pullback in new orders and production.
The economic indicators aroused hopes that the overall economy was contracting enough for the Fed to consider putting the brakes on its aggressive stance against inflation, fueling the stock market rally. Investors widely expect the New Year rally to continue in the short term, with the Fed being more dovish toward the rate hike regime. The Fed had increased its benchmark interest rates by half a percentage point in its last policy meeting to a targeted range between 4.25% and 4.5% and put the “terminal rate” to a target range of 5-5.25%
As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they can benefit from “cash cow” stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Jabil Inc., PepsiCo, Inc., DICK'S Sporting Goods, Inc., Hologic, Inc. and Suzano S.A. are some of the stocks with high ROE to profit from.
Why ROE?
ROE = Net Income/Shareholders’ Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry — the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management’s efficiency in rewarding shareholders with attractive risk-adjusted returns.
Here are five of the 16 stocks that qualified the screen:
Jabil: Headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
It delivered a trailing four-quarter earnings surprise of 8.8%, on average, and has a long-term earnings growth expectation of 12%. It has a VGM Score of A. Currently, Jabil sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
PepsiCo: Headquartered in Purchase, NY, PepsiCo is one of the leading global food and beverage companies. Its complementary brands/businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The company serves customers in more than 200 countries and territories.
The company has a long-term earnings growth expectation of 7.7% and delivered a trailing four-quarter earnings surprise of 4.5%, on average. Pepsi carries a Zacks Rank #2.
DICK'S Sporting: Founded in 1948 in New York, DICK’S Sporting operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc. It owns Golf Galaxy and Field & Stream stores, as well as Team Sports HQ. DICK’S Sporting also operates all-in-one youth sports digital platform.
The company has a long-term earnings growth expectation of 5% and delivered a trailing four-quarter earnings surprise of 10.1%, on average. DICK’S Sporting carries a Zacks Rank #2.
Hologic: Headquartered in Bedford, MA, Hologic develops, manufactures and supplies diagnostics, medical imaging systems and surgical products that cater to the healthcare needs of women. The company is currently focusing on expanding its business across the patient continuum of care and has launched new software products based on its investments in artificial intelligence.
Hologic has a VGM Score of B. The company has a long-term earnings growth expectation of 15.2% and delivered a trailing four-quarter earnings surprise of 46.1%, on average. Hologic carries a Zacks Rank #2.
Suzano: Headquartered in Salvador, Brazil, Suzano produces and sells eucalyptus pulp and paper products. With more than 90 years of experience, this vertically integrated firm is one of the largest producers of paper and graphic products in South America.
Suzano has a long-term earnings growth expectation of 11.2% and delivered a trailing four-quarter earnings surprise of 53.8%, on average. It has a VGM Score of A. It sports a Zacks Rank #1.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2037758/5-stocks-with-high-roe-to-buy-as-rate-hike-fears-subside
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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PepsiCo, Inc. (PEP) : Free Stock Analysis Report
Hologic, Inc. (HOLX) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Suzano S.A. Sponsored ADR (SUZ) : Free Stock Analysis Report
