When a company's return on equity (ROE) ratio tops most of its competitors, it typically implies the company has been more efficient than many of its peers in generating profits.
Thus, investors may want to have a look at the following stocks, as they are topping most of their competitors in terms of a superior ROE ratio.
Alibaba Group Holding Ltd
The first stock to have a look at is Alibaba Group Holding Ltd (BABA, Financial), a Chinese internet retail giant.
Alibaba Group Holding Ltd has a ROE ratio of 23.68%, topping the industry median of 3.03% significantly and ranking higher than 896 out of 975 companies operating in its industry.
The share price has risen 46.3% over the past year up to $259.20 at close on Tuesday for a market capitalization of $701.05 billion and a 52-week range of $155.54 to $268.
The stock has a price-book ratio of 6.49 (versus the industry median of 1.39) and a price-earnings ratio of 32.49 (versus the industry median of 20.83).
GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10 to the company.
As of August, Wall Street recommends 18 strong buys, 29 buys and one hold ratingf for the stock with an average target price is $286.98 per share.
NVIDIA Corp
The second stock investors may want to consider is NVIDIA Corp (NVDA, Financial), a Santa Clara, California-based producer of graphics processing units and system on chip units for the consumer electronics, computer hardware, semiconductors and video game industries.
NVIDIA Corp has a ROE ratio of 29.34%, which is topping the industry median of 5.52% and places higher than 751 out of 795 competitors.
The share price has risen by 192.2% in the past year up to $490.43 at close on Tuesday for a market capitalization of $301.61 billion and a 52-week range of $147.39 to $499.84.
The stock has a price-book ratio of 23.03 (versus the industry median of 2.18) and a price-earnings ratio of 91.68 (versus the industry median of 26.73).
GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability rating of 7 out of 10 to the company.
As of August, Wall Street sell-side analysts recommend seven strong buy ratings, 14 buy ratings, 15 hold ratings, one underperform rating and one sell rating for the stock with an average target price of $431.60 per share.
Procter & Gamble Co
The third stock to consider is Procter & Gamble Co (PG, Financial), a Cincinnati-based multinational consumer goods company.
Procter & Gamble Co exhibits a ROE ratio of 27.58%, which is much higher than the industry median of 5.49% and is positioned above 1,485 out of 1,592 competitors.
The share price has increased by almost 15% over the past year up to $136.51 at close on Tuesday for a market capitalization of $339.38 billion and a 52-week range of $94.34 to $137.52.
The price-book ratio is17.42 (versus the industry median of 1.46) and the price-earnings ratio is 27.55 (versus the industry median of 19.75).
GuruFocus has assigned a score of 6 out of 10 to the financial strength rating and a score of 8 out of 10 to the profitability rating of the company.
As of August, Wall Street recommends six strong buys, four buys, 10 holds and two underperform ratings. The average target price is $138.06 per share.
Disclosure: I have no positions in any security mentioned in this article.
Read more here:
- These Stocks Are Trading Below the Graham Number
- 3 Net-Net Working Capital Stocks for the Short-Term Investor
- This Trio of Stocks Is Trading at a Discount
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