The S&P 500 is poised for a Santa Rally and is expected to extend its winning streak in the new year, banking on Donald Trump’s election win and potential interest rate cuts. Hence, investors should seek out profitable stocks over unprofitable ones that can take advantage of the broader index’s upward trajectory.
To that end, NVIDIA Corporation NVDA and Royal Caribbean Cruises Ltd. RCL are worth buying because of their high net income ratios.
Net Income Ratio
The net income ratio shows a company’s profitability level. It reflects the percentage of net income to total sales revenues.
Using the net income ratio, one can determine a firm’s effectiveness in meeting operating and non-operating expenses from revenues. A higher net income ratio usually implies a company’s ability to generate ample revenues and successfully manage all business functions.
Screening Parameters Using Research Wizard:
The net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.
Zacks Rank Less than or equal to 2: Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are 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 indicates that 70% of the current broker recommendations for the stock are Strong Buy.
These few parameters have narrowed the universe of more than 7,685 stocks to only 34.
Here are the best two of the 34 stocks that qualified for the screening:
NVIDIA
NVIDIA Corporation leads in visual computing technologies and invented the graphic processing unit (GPU). Its promising third-quarter data center results and outlook make it an enticing buy. NVIDIA Corporation has a Zacks Rank #2 (read more: 3 Reasons Besides Q3 Data Center Success to Buy NVIDIA Stock).
NVIDIA’s 12-month net profit margin is 55.7%. The company’s expected earnings growth rate for the next year is 40.8% (read more: NVIDIA or Palantir: The Best AI Investment for 2025).
Image Source: Zacks Investment Research
Royal Caribbean Cruises
Royal Caribbean Cruises operates as a cruise company worldwide. Strong demand for cruising, an uptick in booking numbers, and an increasing loyal customer base are benefiting the company, making it a solid buy. Royal Caribbean Cruises has a Zacks Rank #2.
Royal Caribbean Cruises’ 12-month net profit margin is 16.2%. The company’s expected earnings growth rate for the next year is 23.8%.
Image Source: Zacks Investment Research
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention.
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
