Zacks.com featured highlights Iron Mountain, Suzano, Tapestry, HCA Healthcare and W. R. Berkley

Zacks.com featured highlights Iron Mountain, Suzano, Tapestry, HCA Healthcare and W. R. Berkley

Zacks Equity Research
7 min read
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For Immediate Release

Chicago, IL – March 7, 2024 – Stocks in this week’s article are Iron Mountain Inc. IRM, Suzano S.A. SUZ, Tapestry, Inc. TPR, HCA Healthcare, Inc. HCA and W. R. Berkley Corp. WRB.

Buy 5 High ROE Stocks as Markets Slide on Tech Sector Woes

The broader U.S. equity markets witnessed a steady downtrend over the past couple of trading days after registering their first closing record since November 2021 last week. The uptrend was buoyed by healthy inflation data, with the core personal consumption expenditures price index for January increasing 0.4% month-over-month and 2.8% on a year-over-year basis – on par with broad-based expectations. The optimism was further boosted by AI-focused thrust.

However, the gain was more than wiped off as markets were pulled back by sharp declines witnessed by leading blue-chip firms from the technology sector. With a loss of more than 2%, the S&P 500′s information technology sector dragged the broader index down. Although the decline appeared to be mostly cyclical on the surface, investors would like to seek more clarity from Fed Chair Jerome Powell on the monetary policy, as he heads to Capitol Hill for his congressionally mandated testimony before the House.

The Fed had earlier pledged to cut interest rates several times in 2024, owing to a slowdown in inflation in the later stages of 2023. Given the recent inflationary data, the markets appear vulnerable to sudden downtrends. This, in turn, signifies that the markets need to brace for intense volatility owing to tempered expectations despite a relatively healthy U.S. economy and GDP data.

As investors employ a wait-and-see approach in a classic example of “backing and filling” in the market, they can benefit from “cash cow” stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Iron Mountain Inc., Suzano S.A., Tapestry, Inc., HCA Healthcare, Inc. and W. R. Berkley Corp. are some of the stocks with high ROE to profit from.

ROE: A Key Metric

ROE = Net Income/Shareholders’ Equity

ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.

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