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ROE, which is often used as a basis for investment decisions, is a useful indicator that shows the management efficiency in terms of equity capital.
ROE is a useful indicator that can be used as a basis for making investment decisions, and since it includes investors’ funds, it is a very important indicator.
In this article, I would like to introduce three recommended stocks with ROE of 10% or higher, which is the standard for ROE!
This is a must-see for those who want to analyze companies from now on.
The author has three years of investment experience and has worked in the securities industry.
By reading this article, you’ll get to know the recommended stocks with high ROE!
Three recommended stocks with ROE of 10% or higher!
1 ITOCHU Corporation
ITOCHU Corporation (8001) is the top trading company by market capitalization, and has strengths in non-resources.
It has a high ROE of 12.7% as of August 2021.
The company has eight businesses and does business with 62 countries overseas.
For more information about ITOCHU Corporation, please refer to the following article.
2 Mizuho Leasing Co.
8425 Mizuho Leasing is a leasing company that has increased its dividend for 17 consecutive years, and its good performance makes it a good stock for beginners.
It has an ROE of 11.3% as of August 2021.
It has two businesses and is expanding its business both domestically and internationally.
For more information about Mizuho Leasing, please refer to the following article.
3 Nidec Corporation
Nidec Corporation (6594) manufactures motors for smartphones and home appliances, and is the world’s leading manufacturer.
It has a high ROE of 12% as of July 2021.
The company has 12 businesses and does business overseas.
For more information about Nidec, please refer to the following article.
What is ROE?
ROE stands for “return on equity” and refers to return on equity.
It is an indicator that can show how much profit a company has generated from its equity capital.
Since equity capital refers to shareholders and the profit reserve to date, it is considered important by many shareholders.
Companies with high values can be said to be well managed, as they are able to use their equity capital efficiently.
Therefore, the higher the number, the better.
What is the standard for ROE?
As a general guideline, 10% is said to be the standard for judgment.
However, it is important to note that the standard for the figure changes depending on the industry.
This is because there are some industries that require periodic capital investment and others that do not.
The manufacturing industry, which produces products, requires large capital investments, while IT companies do not require large capital investments, so the numbers change.
Therefore, a company with a higher number is recommended for stocks with less capital investment.
When making comparisons, it is important to do so in the same industry.
How does it differ from ROA?
What ROE and ROA have in common is how much profit they have generated for something, but they are actually different.
ROE refers to equity capital, while ROA refers to total assets, so the analysis can be broader than ROE.
To put it simply, ROE is an indicator that looks at management efficiency in terms of equity capital.
ROA, on the other hand, is an indicator that looks at the management efficiency of a company’s overall assets.
In summary, it is important to conduct a comprehensive analysis without limiting yourself to a single indicator.
- ROE shows the efficiency of equity capital.
- The standard ROE is 10%.
- Other indicators should also be used as a reference.
I have introduced three recommended stocks with an ROE of 10% or higher!
Investment is about equity capital. Investing is about equity capital, so make your own final decision after referring to a variety of opinions.
I will continue to provide useful information for investment, so please stay tuned.
Thank you for reading to the end!