Scoring Five for Five
In a world of one-hit wonders, it can be comforting to have some proven winners in your portfolio. By that, we mean stocks that have displayed superior performance in key financial trends over the long term.
For the purposes of this week's screen, the long term is defined as the past five years. We started with the so-called "top line," looking for those U.S.-based companies that had posted increases in annual sales for five consecutive years.
Then we went a little deeper. Our next filter was for those outfits that had boosted their return on equity in each year of the period. Return on equity, which is net income divided by average common equity, is considered a measure of how efficiently a company deploys its capital.
Next, we searched a key profitability metric, looking for those outfits with five consecutive years of growth in their net profit margin (after-tax profits as a percentage of sales). And to ensure that these were stable, liquid stocks, we finished by sifting for those priced above $5 -- and with market capitalizations above $1 billion. When we were finished, these nine names emerged: