Chicago, IL – May 29, 2024 – Stocks in this week’s article are NVIDIA NVDA, Alphabet GOOGL and Royal Caribbean Cruises RCL.
Top 3 Profitable Stocks to Buy Using Net Income Ratio
Astute investors must look for companies offering solid returns after meeting all operating and non-operating costs. Thus, it is a good idea to bet on a profitable company over a loss-making one.
Here, we have used the concept of accounting ratios to evaluate a company's profitability. There are several profitability ratios, from which we have chosen the most successful and frequently used profitability metric to determine a company's bottom-line performance.
To that end, NVIDIA, Alphabet and Royal Caribbean Cruises have been selected as the top picks with a high net income ratio.
Net Income Ratio
The net income ratio gives us the exact profitability level of a company. 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.
Here are three of the eight stocks that qualified for the screening:
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. The 12-month net profit margin of NVDA is 53.4%.
Alphabet is one of the most innovative companies in the modern technological age. The 12-month net profit margin of GOOGL is 25.9%.
Royal Caribbean Cruises is a cruise company. The 12-month net profit margin of RCL is 14.3%.
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