5 Mid-Cap Consumer Goods Stocks Maintain Higher ROE – MO, ABV, BTI, F, COH

  on Aug 17,2012 Posted in Finance ,Investment Ideas
 
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Many long-term investors would prefer to keep their focus on a firm’s profitability rather than earnings per share when researching a stock. The reason behind this is one profitability measure, return on equity, can help you explore a firm’s earnings growth prospects. While contrasting profit to sales is a suitable measure, many professional money managers favor return on equity (ROE), which is net profit divided by “shareholder’s equity.”

The ratio tells investors how effectively their capital is being reinvested. A company that maintain high ROE is considered more successful to generate cash internally. Investors usually prefer companies with high and growing returns on equity. However, it is not always true that all high ROE companies make good investments. The better benchmark is to make a comparison of a company’s return on equity with its industry average.

Altria Group, Inc (NYSE:MO) was able to keep return on equity at 99.10% in the trailing twelve months while Reuters data showed that industry’s average stands at 99.10% and sector’s optimum level is 62.46%. MO through its subsidiaries, engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally.

Companhia de Bebidas das Americas (ADR) (NYSE:ABV) maintained return on equity for the last twelve months at 34.91%, higher than what Reuters data shows regarding the industry’s average. Its latest closing price was +1.63% above the SMA200 while the distance from SMA 50 and SMA 20 was +1.62% and +0.09% respectively.

In the last 12 months, British American Tobacco PLC (ADR) (NYSE:BTI) generated 39.60% in income from the money shareholders have invested. Its price, as of the latest close, was up 33.84% compared with the 52 week low and was 2.43% below the 52 week high. BTI through its subsidiaries, engages in the manufacture, distribution, and sale of tobacco and nicotine products.

Ford Motor Company (NYSE:F) over the previous 12 months has kept return on equity at 158.42%. Its latest closing price was -12.44% down from an average-price of 200 days while it maintained a distance from the SMA 50 at -0.09% and +4.53% compared with the SMA 20.

Coach, Inc (NYSE:COH) has been able to maintain return on equity at 57.63% for the last twelve months. The stock was up 26.25% from the 52 week low and was 28.39% below the 52 week high. COH designs and markets accessories and gifts for women and men in the United States and internationally.

 Disclosure: The views and opinions expressed in this article are exclusively those of the authors who have no stake in any stocks mentioned, and hold no plan to acquire any stake within the next 5 days.


 



 

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