Hello everyone. I’m @olivertomolife and I love investing and shareholder special offers!
When buying stocks, dividend yield and growth potential are important, but the profit margin of the company is also important.
I think many people are attracted to companies that generate large profits with small assets.
Using ROA, which can find such companies, I’m going to introduce three recommended stocks that I found!
The author has three years of investment experience and has experience in the securities industry.
By reading this article, you’ll learn about stocks with good managerial efficiency!
Three recommended stocks with ROA over 5%!
Monotarou, Inc. (3064) was established in 2000 by Sumitomo Corporation and Granger Corporation of the United States to facilitate the procurement of materials in Japan.
As of July 2021, ROA is 19.5%, which is quite high.
By maximizing the use of the Internet, Monotaro has been able to keep prices low and offer a wide selection of products.
For more information about Monotaro, please refer to the following article.
Cota, a 4923 company, was founded in 1979 to sell scalp cosmetics to beauty salons.
It has a high ROA of 10.6% as of July 2021.
The company is researching higher quality products than shampoos sold to general consumers, and places importance on communication with beauty salons.
For more information on Cota, please refer to the following article.
3 Nippon Kanzai
Nippon Kanzai, 9728, is a real estate management service company that manages buildings in Japan.
As of August 2021, its ROA is 6.6%, making it a company with good management efficiency.
It is a comprehensive management company and also does building maintenance and apartment management.
For more information on Nippon Kanzai, please refer to the following article.
What is ROA?
ROA is an abbreviation for “return on asset,” and refers to return on assets.
It is an indicator that can be viewed as one of the main financial indicators, and it provides an idea of how much profit has been generated from the company’s overall assets.
The higher this number, the more efficient the company is in generating profits.
A company with a high ROA is also characterized by a good balance between assets and profits, since it is making a profit from its limited assets.
Therefore, a company that aims to increase its ROA can be said to be facing its management well.
How much is the standard for ROA?
As one standard, a company with an ROA of 5% or higher is said to be excellent.
This number is a company average and not industry specific, so the number will vary depending on the industry.
A company that needs a large amount of capital investment will have more assets, so the number will be lower.
On the other hand, for companies that do not require equipment, the value will be higher, so make comparisons within the same industry.
Points to keep in mind when referring to ROA
1 External factors can change the value.
It can be affected by changes in the stocks or foreign currencies that a company has.
Since many Japanese companies do business with foreign countries, they may be subject to external risks depending on their environment.
The fact that companies sometimes revise their financial results may have something to do with these causes as well.
2 Deterioration of figures due to borrowing
A company that is growing its business will invest upfront, which may lead to a decline in ROA for that period.
Since they are investing with an eye on future profits, it will take time for those returns to return.
Therefore, we need to accept these periods as preparation periods.
Since these data are disclosed to investors in the form of financial reports, it is a good idea to check them from time to time.
- The average ROA of a company is 5%.
- Comparison by industry is necessary.
- The best value in this issue is Monotaro
I’ve introduced you to three stocks whose ROA is over 5%!
Investing is your own responsibility. Investing is your own responsibility. Make your own final decision after referring to various opinions.
I will continue to provide useful information for investment, so please stay tuned.
Thank you for reading to the end!