When a company's return on equity (ROE) ratio tops the majority of its competitors, it typically implies the company has been more efficient than many of its competitors in generating earnings.
Thus, investors may want to have a look at the following stocks, as they are topping most of their peer companies in terms of a higher ROE ratio.
Apple Inc
The first stock to have a look at is Apple Inc (AAPL, Financial), a U.S. electronic devices giant based in Cupertino, California.
Apple Inc has a ROE ratio of 68.38%, topping the industry median of 4.35% significantly.
The share price has climbed 106% over the past year up to $121.10 at close on Tuesday for a market capitalization of $2.07 trillion and a 52-week range of $53.15 to $137.98.
The stock has a price-book ratio of 28.71 (versus the industry median of 1.84) and a price-earnings ratio of 36.83 (versus the industry median of 24.18).
GuruFocus has assigned a financial strength rating of 6 out of 10 and a profitability rating of 10 out of 10 to the company.
As of October, Wall Street recommends 11 strong buys, 21 buys and six hold ratings for the stock and has established an average target price of $120.08 per share.
Johnson & Johnson
The second stock to consider is Johnson & Johnson (JNJ, Financial), a U.S. drug giant based in New Brunswick, New Jersey.
Johnson & Johnson exhibits a ROE ratio of 25.08%, which is topping the industry median of 3.14%.
The share price has increased by 11.7% over the past year up to $148.36 at close on Tuesday for a market capitalization of $390.61 billion and a 52-week range of $109.16 to $157.
The stock has a price-book ratio of 6.2 (versus the industry median of 2.34) and a price-earnings ratio of 26.07 (versus the industry median of 25.28).
GuruFocus has assigned a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10 to the company.
As of October, Wall Street sell-side analysts recommend four strong buys, eight buys, eight hold ratings, two underperform ratings and one sell rating for the stock. They have established an average target price of $165.29 per share.
Netflix Inc
The third stock to have a look at is Netflix Inc (NFLX, Financial), a U.S. provider of internet entertainment services based in Los Gatos, California.
Netflix Inc has a ROE ratio of 35.01%, while the industry has a median of -0.84.
The share price has risen by almost 95% over the past year up to $554.09 at close on Tuesday for a market capitalization of $244.36 billion and a 52-week range of $264.57 to $575.37.
The price-book ratio is 26.18 (versus the industry median of 1.5) and the price-earnings ratio is 93.44 (versus the industry median of 21.16).
GuruFocus has assigned a score of 5 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 October, Wall Street recommends 11 strong buys, 14 buys, 14 holds, one underperform rating and one sell rating. They have set an average target price of $523.25 per share for the stock.
Disclosure: I have no positions in any security mentioned in this article.
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