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The 5 Most Predictable Companies with Highest Return on Assets

March 20, 2012 | About:
Holly LaFon

Holly LaFon

320 followers
You can use the new GuruFocus All-in-One screener to find stocks with almost any characteristics. It has different adjustments under five categories: description, fundamental, historical growth, valuation, gurus and insiders. For instance, if criteria are entered for stocks with a predictability rank of 5 stars and a minimum ROA of 20%, five stocks appear: Apollo Group (NASDAQ:APOL), Medifast Inc. (NYSE:MED), Boston Beer Inc. (NYSE:SAM), Alliances Res (NASDAQ:ARLP) and Factset Resh (NYSE:FDS).

Return on assets indicates how much profit a company makes on its total assets. Technically, it tells what earnings were generated from invested capital (assets). The formula is: Net Income/Total Assets. The higher the better.

Apollo Group (NASDAQ:APOL)

Apollo Group operates for profit education subsidiaries University of Phoenix, Apollo Global, College for Financial Planning and Institute for Professional Development. Its return on assets was the fifth-highest of companies the screener found, at 16.66%, increased slightly from 16.11% the prior year. The five-year average ROA for the industry is 5.2%.



The company had to make changes in how it recruits students in 2010, which resulted in a 4% decline in revenue to $4.7 billion in 2011. Net income increased from $553 billion in 2010 to $572 billion in 2011. Total assets also declined from $3.6 billion in 2010 to $3.3 billion in 2011.

Medifast Inc. (NYSE:MED)

Medifast produces, distributes and sells weight and health management products with the brand names Medifast, Take Shape for Life, Hi-Energy Weight Control Centers and Woman’s Wellbeing.

Its return on assets in the third quarter of 2011 was 19.6%, which has been increasing in the past several years. The average return on assets for the specialty retail industry is 10.48% for the trailing 12 months.



The company’s total assets amounted to $94 million in 2010, which increased from $62.8 million in 2009. Net income also increased to $19.6 million in 2010 from $12 million in 2009.

Boston Beer Inc. (NYSE:SAM)

Boston Beer Inc. is the largest brewer of handcrafted beers in America. Boston Beer is a growing company that recently saw a large increase in its return on assets. It increased from 19.3% in 2010 to 29.7% in 2011, and was negative as recently as 2008. The average return on assets for the beverages industry in the trailing 12 months is 9.47%.



In 2011, the company’s total assets increased to $272.5 million from $258.5 million in 2010. Net income increased to $66 million from $50 million.

Alliances Resources Partners (NASDAQ:ARLP)

Alliance Resources Partners is a coal producer and marketer primarily in the eastern U.S. Its ROA has been increasing since 2008 and increased to 22.5% in 2011 from 21.4% in 2010. The average return on assets for the oil, gas & consumable fuels industry in the trailing 12 months is 24.47%.



In 2011, its total assets increased to $1.7 billion from $1.1 billion in 2010. Its net income increased to $389 million from $321 million.

Factset Research Systems Inc. (NYSE:FDS)

Factset researches global market trends and develops analytical tools for investors. Of all of GuruFocus’ 5-star predictable companies, it has the highest return on assets at 27%. ROA has been increasing over the past several years. The average return on assets for the software industry for the trailing 12 months is 13.07%.



In 2011, the company’s total assets increased to $657 million from $645 the prior year. Its net income increased to $171 million from $150.

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