Profitable Companies to Invest in for Strong Returns in the Second Half of the Year

Investors seeking strong returns after covering all operating and non-operating expenses would do well to focus on companies that demonstrate high profitability. This can be achieved by examining a company's bottom-line performance through various accounting ratios. Among these ratios, one of the most effective and commonly used metrics is the net income ratio.

The net income ratio gives us a clear picture of a company's profitability level, reflecting the percentage of net income to total sales revenues. By utilizing this ratio, investors can determine a firm's effectiveness in meeting operating and non-operating expenses from revenues. A higher net income ratio typically indicates a company's ability to generate substantial revenues and successfully manage all business functions.

To identify profitable companies that meet these criteria, we employed the Research Wizard screening tool. This versatile tool enables users to create customized strategies based on various parameters, including profitability ratios, growth metrics, and analyst estimates. By incorporating a combination of these factors, we narrowed down our universe of over 7,685 stocks to just 11 top picks.

Screening Parameters Using Research Wizard

In addition to the net income ratio, we utilized several other screening criteria to arrive at a winning strategy. These parameters included:

• Zacks Rank Equal to #1: Stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance, regardless of market conditions.
• Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Companies that have witnessed higher-than-industry sales and net income growth in the past 12 months are well-positioned to perform well.
• Trailing 12-Month Net Income Ratio Higher than X Industry: A high net income ratio indicates a company's solid profitability.
• Percentage Rating Strong Buy greater than 70: This parameter ensures that at least 70% of current broker recommendations for the stock are Strong Buy.

Top Picks: Intuit, Dave, and Nova

Three of the 11 stocks that qualified for our screening are:

Intuit Inc. (INTU)

Intuit offers a range of products and services related to financial management, compliance, and marketing within the United States. The company's 12-month net profit margin stands at 19.1%.

Dave Inc. (DAVE)

Dave provides a variety of financial products and services via its financial services platform in the United States. The company's 12-month net profit margin is 13.8%.

Nova Ltd. (NVMI)

Nova is involved in the design, development, production, and sale of process control systems used in the semiconductor manufacturing industry. Their operations extend across various countries, including Israel, Taiwan, the United States, China, Korea, and other international locations. The company's 12-month net profit margin stands at 28.5%.

Conclusion

Investors seeking strong returns should focus on companies that demonstrate high profitability. By examining a company's bottom-line performance through accounting ratios such as the net income ratio, investors can determine a firm's effectiveness in meeting operating and non-operating expenses from revenues. The Research Wizard screening tool enables users to create customized strategies based on various parameters, including profitability ratios, growth metrics, and analyst estimates. By incorporating a combination of these factors, we identified three top picks: Intuit Inc., Dave Inc., and Nova Ltd.

These companies demonstrate high net income margins and are well-positioned for strong performance in the second half of the year. By investing in profitable companies like these, investors can increase their chances of achieving their financial goals.