Investing 101: Rallying Stocks With Solid DuPont Trends
Investing 101: Rallying Stocks With Solid DuPont Trends
When it comes to investing, are you a follower of momentum ideas? If so, the following information may be of interest to you.
To create our list we started with a universe of stocks with market caps over $300 million that are rallying above their 20, 50, and 200 day moving averages (MA).
Next, we performed a DuPont analysis, breaking the Return on Equity (ROE) equation into three parts:
All of the stocks mentioned below have seen rising ROE values during the recent quarter.
Want clarification on these terms, as well as their implications? Let's take a closer look:
Momentum investing aims to capitalize on the continuance of existing trends and the strength behind it.
Rallying: When a stock is rallying it means it is performing above its moving average for a given time period. It is presented as a % of performance relative to the average. When a stock is performing above its 20-day moving average (MA) as well as its 50 and 200 day moving averages, it signals bullish momentum. All the stocks in this list are rallying above their 20, 50, and 200-day MA.
Return on Equity (ROE) is a widely-used profitability measure. In general, the higher the ROE the more profitable the company appears. The problem with this is that profitability can come from many sources ? some better than others.
In the 1920s, the DuPont Corporation developed a useful equation that breaks down ROE into three components.
Net profit margin reflects cost structure, asset efficiency reflects productivity, and financial leverage is use of debt. Increases in any of the three can contribute to increased ROE.
In general, an encouraging DuPont breakdown implies one or more of the following:
??? Improving Net Profit Margin, i.e. higher Net Income/ Revenues??? Improving Asset Efficiency, i.e. higher Sales/Assets??? Decreasing Financial Leverage ratio, i.e. lower Assets/Equity
In other words, it is preferable for ROE to rise because of higher net profit margins or asset efficiency. Increasing financial leverage, which would increase ROE, is not always a positive development for a company.
?
Now that you're prepared, let's take a look at the list below. Use it as a starting-off point in your own analysis.?
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1. Visa, Inc. (V, Earnings, Analysts, Financials): Business Services Industry. Market cap of $70.13B. The stock is currently trading at 4.55% above its 20-Day SMA, 3.88% above its 50-Day SMA, and 13.33% above it 200-Day SMA. MRQ Net Profit Margin increased to 43.28% from 35.29% from the previous year, Sales/Assets increased to 0.07 from 0.06, while Assets/Equity decreased to 1.32 from 1.33. The stock has had a couple of great days, gaining 7.85% over the last week.
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2. Mastercard Incorporated (MA, Earnings, Analysts, Financials): Business Services Industry. Market cap of $41.34B. The stock is currently trading at 3.16% above its 20-Day SMA, 6.92% above its 50-Day SMA, and 23.40% above it 200-Day SMA. MRQ Net Profit Margin increased to 36.47% from 33.55% from the previous year, Sales/Assets increased to 0.18 from 0.18, while Assets/Equity decreased to 1.65 from 1.81. The stock has had a couple of great days, gaining 8.39% over the last week.
?
3. Monsanto Co. (MON, Earnings, Analysts, Financials): Agricultural Chemicals Industry. Market cap of $37.80B. The stock is currently trading at 3.17% above its 20-Day SMA, 0.10% above its 50-Day SMA, and 3.40% above it 200-Day SMA. MRQ Net Profit Margin increased to 18.94% from 12.96% from the previous year, Sales/Assets increased to 0.18 from 0.16, while Assets/Equity decreased to 1.69 from 1.73. The stock has had a couple of great days, gaining 7.09% over the last week.
?
4. Southern Company (SO, Earnings, Analysts, Financials): Electric Utilities Industry. Market cap of $35.02B. The stock is currently trading at 2.99% above its 20-Day SMA, 3.15% above its 50-Day SMA, and 7.85% above it 200-Day SMA. MRQ Net Profit Margin increased to 13.71% from 12.51% from the previous year, Sales/Assets increased to 0.08 from 0.08, while Assets/Equity decreased to 3.10 from 3.21. The stock has gained 15.9% over the last year.
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5. Simon Property Group Inc. (SPG, Earnings, Analysts, Financials): REIT Industry. Market cap of $33.82B. The stock is currently trading at 3.11% above its 20-Day SMA, 0.65% above its 50-Day SMA, and 8.66% above it 200-Day SMA. MRQ Net Profit Margin increased to 19.79% from 16.26% from the previous year, Sales/Assets increased to 0.04 from 0.04, while Assets/Equity decreased to 5.12 from 5.21. The stock has gained 31.01% over the last year.
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6. priceline.com Incorporated (PCLN, Earnings, Analysts, Financials): General Entertainment Industry. Market cap of $25.06B. The stock is currently trading at 3.58% above its 20-Day SMA, 1.15% above its 50-Day SMA, and 8.32% above it 200-Day SMA. MRQ Net Profit Margin increased to 23.25% from 14.98% from the previous year, Sales/Assets increased to 0.33 from 0.31, while Assets/Equity decreased to 1.69 from 1.77. The stock has had a couple of great days, gaining 12.14% over the last week.
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7. NextEra Energy, Inc. (NEE, Earnings, Analysts, Financials): Electric Utilities Industry. Market cap of $23.38B. The stock is currently trading at 5.32% above its 20-Day SMA, 1.69% above its 50-Day SMA, and 4.64% above it 200-Day SMA. MRQ Net Profit Margin increased to 14.64% from 11.61% from the previous year, Sales/Assets increased to 0.07 from 0.07, while Assets/Equity decreased to 3.66 from 3.79. The stock has gained 6.95% over the last year.
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8. Public Storage (PSA, Earnings, Analysts, Financials): Market cap of $20.50B. The stock is currently trading at 4.91% above its 20-Day SMA, 4.25% above its 50-Day SMA, and 11.32% above it 200-Day SMA. MRQ Net Profit Margin increased to 47.47% from 30.67% from the previous year, Sales/Assets increased to 0.05 from 0.04, while Assets/Equity decreased to 1.08 from 1.11. The stock has had a couple of great days, gaining 5.41% over the last week.
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9. Public Service Enterprise Group Inc. (PEG, Earnings, Analysts, Financials): Diversified Utilities Industry. Market cap of $16.70B. The stock is currently trading at 6.10% above its 20-Day SMA, 4.70% above its 50-Day SMA, and 6.36% above it 200-Day SMA. MRQ Net Profit Margin increased to 13.08% from 9.49% from the previous year, Sales/Assets increased to 0.09 from 0.08, while Assets/Equity decreased to 2.85 from 3.15. The stock has gained 7.42% over the last year.
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10. Marsh & McLennan Companies, Inc. (MMC, Earnings, Analysts, Financials): Insurance Brokers Industry. Market cap of $15.74B. The stock is currently trading at 5.10% above its 20-Day SMA, 0.83% above its 50-Day SMA, and 3.73% above it 200-Day SMA. MRQ Net Profit Margin increased to 9.63% from 9.06% from the previous year, Sales/Assets increased to 0.19 from 0.17, while Assets/Equity decreased to 2.30 from 2.60. The stock has had a couple of great days, gaining 6.45% over the last week.
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(List compiled by Becca Lipman and Daniel Guttridge. ROE data sourced from Google Finance, all other data sourced from Finviz.)
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Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...
?
Analyze These Ideas: Getting Started
Read descriptions for all companies mentioned
Access a performance overview for all stocks in the list
Compare analyst ratings for the companies mentioned
Compare analyst ratings to annual returns for stocks mentioned
Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
Visa, Inc. (V, Chart, Download SEC Filings)
Mastercard Incorporated (MA, Chart, Download SEC Filings)
Monsanto Co. (MON, Chart, Download SEC Filings)
Southern Company (SO, Chart, Download SEC Filings)
Simon Property Group Inc. (SPG, Chart, Download SEC Filings)
priceline.com Incorporated (PCLN, Chart, Download SEC Filings)
NextEra Energy, Inc. (NEE, Chart, Download SEC Filings)
Public Storage (PSA, Chart, Download SEC Filings)
Public Service Enterprise Group Inc. (PEG, Chart, Download SEC Filings)
Marsh & McLennan Companies, Inc. (MMC, Chart, Download SEC Filings)
New to Kapitall?1. New to the site? Click here to register for a free account, and gain access to more tools and data2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
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Articles
Investing 101: Rallying Stocks With Solid DuPont Trends
When it comes to investing, are you a follower of momentum ideas? If so, the following information may be of interest to you.
To create our list we started with a universe of stocks with market caps over $300 million that are rallying above their 20, 50, and 200 day moving averages (MA).
Next, we performed a DuPont analysis, breaking the Return on Equity (ROE) equation into three parts:
All of the stocks mentioned below have seen rising ROE values during the recent quarter.
Want clarification on these terms, as well as their implications? Let's take a closer look:
Momentum investing aims to capitalize on the continuance of existing trends and the strength behind it.
Rallying: When a stock is rallying it means it is performing above its moving average for a given time period. It is presented as a % of performance relative to the average. When a stock is performing above its 20-day moving average (MA) as well as its 50 and 200 day moving averages, it signals bullish momentum. All the stocks in this list are rallying above their 20, 50, and 200-day MA.
Return on Equity (ROE) is a widely-used profitability measure. In general, the higher the ROE the more profitable the company appears. The problem with this is that profitability can come from many sources ? some better than others.
In the 1920s, the DuPont Corporation developed a useful equation that breaks down ROE into three components.
Net profit margin reflects cost structure, asset efficiency reflects productivity, and financial leverage is use of debt. Increases in any of the three can contribute to increased ROE.
In general, an encouraging DuPont breakdown implies one or more of the following:
??? Improving Net Profit Margin, i.e. higher Net Income/ Revenues??? Improving Asset Efficiency, i.e. higher Sales/Assets??? Decreasing Financial Leverage ratio, i.e. lower Assets/Equity
In other words, it is preferable for ROE to rise because of higher net profit margins or asset efficiency. Increasing financial leverage, which would increase ROE, is not always a positive development for a company.
?
Now that you're prepared, let's take a look at the list below. Use it as a starting-off point in your own analysis.?
?
1. Visa, Inc. (V, Earnings, Analysts, Financials): Business Services Industry. Market cap of $70.13B. The stock is currently trading at 4.55% above its 20-Day SMA, 3.88% above its 50-Day SMA, and 13.33% above it 200-Day SMA. MRQ Net Profit Margin increased to 43.28% from 35.29% from the previous year, Sales/Assets increased to 0.07 from 0.06, while Assets/Equity decreased to 1.32 from 1.33. The stock has had a couple of great days, gaining 7.85% over the last week.
?
2. Mastercard Incorporated (MA, Earnings, Analysts, Financials): Business Services Industry. Market cap of $41.34B. The stock is currently trading at 3.16% above its 20-Day SMA, 6.92% above its 50-Day SMA, and 23.40% above it 200-Day SMA. MRQ Net Profit Margin increased to 36.47% from 33.55% from the previous year, Sales/Assets increased to 0.18 from 0.18, while Assets/Equity decreased to 1.65 from 1.81. The stock has had a couple of great days, gaining 8.39% over the last week.
?
3. Monsanto Co. (MON, Earnings, Analysts, Financials): Agricultural Chemicals Industry. Market cap of $37.80B. The stock is currently trading at 3.17% above its 20-Day SMA, 0.10% above its 50-Day SMA, and 3.40% above it 200-Day SMA. MRQ Net Profit Margin increased to 18.94% from 12.96% from the previous year, Sales/Assets increased to 0.18 from 0.16, while Assets/Equity decreased to 1.69 from 1.73. The stock has had a couple of great days, gaining 7.09% over the last week.
?
4. Southern Company (SO, Earnings, Analysts, Financials): Electric Utilities Industry. Market cap of $35.02B. The stock is currently trading at 2.99% above its 20-Day SMA, 3.15% above its 50-Day SMA, and 7.85% above it 200-Day SMA. MRQ Net Profit Margin increased to 13.71% from 12.51% from the previous year, Sales/Assets increased to 0.08 from 0.08, while Assets/Equity decreased to 3.10 from 3.21. The stock has gained 15.9% over the last year.
?
5. Simon Property Group Inc. (SPG, Earnings, Analysts, Financials): REIT Industry. Market cap of $33.82B. The stock is currently trading at 3.11% above its 20-Day SMA, 0.65% above its 50-Day SMA, and 8.66% above it 200-Day SMA. MRQ Net Profit Margin increased to 19.79% from 16.26% from the previous year, Sales/Assets increased to 0.04 from 0.04, while Assets/Equity decreased to 5.12 from 5.21. The stock has gained 31.01% over the last year.
?
6. priceline.com Incorporated (PCLN, Earnings, Analysts, Financials): General Entertainment Industry. Market cap of $25.06B. The stock is currently trading at 3.58% above its 20-Day SMA, 1.15% above its 50-Day SMA, and 8.32% above it 200-Day SMA. MRQ Net Profit Margin increased to 23.25% from 14.98% from the previous year, Sales/Assets increased to 0.33 from 0.31, while Assets/Equity decreased to 1.69 from 1.77. The stock has had a couple of great days, gaining 12.14% over the last week.
?
7. NextEra Energy, Inc. (NEE, Earnings, Analysts, Financials): Electric Utilities Industry. Market cap of $23.38B. The stock is currently trading at 5.32% above its 20-Day SMA, 1.69% above its 50-Day SMA, and 4.64% above it 200-Day SMA. MRQ Net Profit Margin increased to 14.64% from 11.61% from the previous year, Sales/Assets increased to 0.07 from 0.07, while Assets/Equity decreased to 3.66 from 3.79. The stock has gained 6.95% over the last year.
?
8. Public Storage (PSA, Earnings, Analysts, Financials): Market cap of $20.50B. The stock is currently trading at 4.91% above its 20-Day SMA, 4.25% above its 50-Day SMA, and 11.32% above it 200-Day SMA. MRQ Net Profit Margin increased to 47.47% from 30.67% from the previous year, Sales/Assets increased to 0.05 from 0.04, while Assets/Equity decreased to 1.08 from 1.11. The stock has had a couple of great days, gaining 5.41% over the last week.
?
9. Public Service Enterprise Group Inc. (PEG, Earnings, Analysts, Financials): Diversified Utilities Industry. Market cap of $16.70B. The stock is currently trading at 6.10% above its 20-Day SMA, 4.70% above its 50-Day SMA, and 6.36% above it 200-Day SMA. MRQ Net Profit Margin increased to 13.08% from 9.49% from the previous year, Sales/Assets increased to 0.09 from 0.08, while Assets/Equity decreased to 2.85 from 3.15. The stock has gained 7.42% over the last year.
?
10. Marsh & McLennan Companies, Inc. (MMC, Earnings, Analysts, Financials): Insurance Brokers Industry. Market cap of $15.74B. The stock is currently trading at 5.10% above its 20-Day SMA, 0.83% above its 50-Day SMA, and 3.73% above it 200-Day SMA. MRQ Net Profit Margin increased to 9.63% from 9.06% from the previous year, Sales/Assets increased to 0.19 from 0.17, while Assets/Equity decreased to 2.30 from 2.60. The stock has had a couple of great days, gaining 6.45% over the last week.
?
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(List compiled by Becca Lipman and Daniel Guttridge. ROE data sourced from Google Finance, all other data sourced from Finviz.)
?
Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...
?
Analyze These Ideas: Getting Started
Read descriptions for all companies mentioned
Access a performance overview for all stocks in the list
Compare analyst ratings for the companies mentioned
Compare analyst ratings to annual returns for stocks mentioned
Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
Visa, Inc. (V, Chart, Download SEC Filings)
Mastercard Incorporated (MA, Chart, Download SEC Filings)
Monsanto Co. (MON, Chart, Download SEC Filings)
Southern Company (SO, Chart, Download SEC Filings)
Simon Property Group Inc. (SPG, Chart, Download SEC Filings)
priceline.com Incorporated (PCLN, Chart, Download SEC Filings)
NextEra Energy, Inc. (NEE, Chart, Download SEC Filings)
Public Storage (PSA, Chart, Download SEC Filings)
Public Service Enterprise Group Inc. (PEG, Chart, Download SEC Filings)
Marsh & McLennan Companies, Inc. (MMC, Chart, Download SEC Filings)
New to Kapitall?1. New to the site? Click here to register for a free account, and gain access to more tools and data2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
When it comes to investing, are you a follower of momentum ideas? If so, the following information may be of interest to you.
Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...
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