5 stocks for an 18% profit margin after taxes
I consider an 18% profit margin after taxes a great result. Here are five stocks that fit the criteria.
The point of business is not revenue or growth. It's profit. If oil sells for $80 a barrel, and you can extract it from the ground for $50, you have a good business. If your oil is a mile underwater and costs $120 to extract, you have a bad business.
I like companies with fat profit margins. To me, obscene profits are just fine. I believe that companies should be able to keep as much of their profits as possible. This allows them to reinvest in their business, hire more staff, and provide better products and services.
I believe that companies with high profit margins are shining examples of success. I consider an 18% margin after taxes to be a great result. Here are five stocks that I believe fit the bill.
Cisco Systems is a world leader in computer networking and cybersecurity, and has achieved an after-tax profit margin of more than 20% for nine years in a row. The company's innovative products and services enable businesses of all sizes to stay connected and productive. Cisco's industry-leading WebEx video conferencing platform helps organizations communicate and collaborate more effectively.
Cisco was once a darling of investors. It went public in 1990 and soared more than 100-fold in value, peaking as the world's most valuable company in early 2000. However, Cisco has since struggled to keep up with the rapidly changing technology landscape, and its stock price has suffered as a result. Cisco is still a large and well-respected company, but it is no longer the industry powerhouse it once was.
Looking back at Cisco's history, it's amazing to see how far the company has come since the dot-com bubble burst in 2000. It was a difficult few years for Cisco, but thanks to the hard work of its employees and the support of its customers, the company has slowly but surely climbed back to the top.
Looking at the current market conditions, it seems that the stock is selling at a relatively normal multiple. However, considering the current market conditions, this multiple is actually below average. This could be a good opportunity to invest in this stock.
I remain bullish on the oil and gas industry, and ConocoPhillips in particular. Despite some recent setbacks, I believe that the industry as a whole is on the rebound, and ConocoPhillips is poised to take advantage of this trend. With an after-tax margin of 19%, I believe the company is positioned for continued success in the coming years.
Looking at ConocoPhillips' recent financials, it's clear that the company has been able to weather the storm better than most of its competitors. Its debt levels are manageable, and its stock price looks attractive at just nine times earnings. Given the current state of the oil and gas industry, ConocoPhillips looks like a relative safe haven for investors.
Applied Materials is a world leader in semiconductor manufacturing equipment. The company is based in Santa Clara, California, and has been profitable in 14 of the past 15 years. Applied Materials is a stable and reliable company that provides high-quality products and services.
The company is on track to deliver another strong year of results, with after-tax margins remaining above 18%. This is a testament to the company's ability to generate consistent profits, despite challenging market conditions.
I believe that the long-term trend for the semiconductor industry is still for chip use to increase despite recent declines in personal-computer sales and the working off of the shortage of chips used in cars.
I believe that the sell-off in the tech sector has been overdone and that there is still plenty of growth and innovation to be had in this sector of the economy. I would recommend buying three tech stocks today as I believe they offer good value at current prices.
As the world's largest maker of analog chips, TXN is in a great position to continue expanding its margins and profits. The company's products are in high demand, and its after-tax profit margin last year was nearly 44%. With strong demand and a commitment to excellence, TXN is poised for continued success.
Biogen is a biotech pharmaceutical firm that has been struggling in recent years. The company's stock has fallen by about 40% in the past year, and it seems like things are only going to get worse for Biogen.
Investors were initially excited about Biogen's drug for Alzheimer's disease, aducanumab. However, data from clinical trials was not strong enough to lead an advisory panel of the Food and Drug Administration (FDA) to recommend approval. Despite this, the FDA approved the drug anyway, in a controversial decision.
I believe that investors are too focused on Biogen's new drug and not giving enough credit to the company's other pharmaceuticals. I think this is a mistake and that Biogen has a strong lineup of drugs that deserve more attention.
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I'm always striving to beat the market, and I'm happy to say that my average 12-month return on investment is 18.2%. This is higher than the Standard & Poor's 500 Total Return Index, which stands at 14.8%. Out of the 12 columns I've written on this theme, 8 have shown a profit. However, I'm aiming to increase that number, and I'm confident that I can continue to outperform the market.
I believe that everyone should be mindful of the fact that my column results are hypothetical and may not accurately reflect results that I obtain for clients. Additionally, it is important to remember that past performance is not necessarily indicative of future results.
It's been a tough year for investors, with even the best stock pickers struggling to keep up with the market. My own recommendations from a year ago lost 13.7%, which was slightly worse than the 12.2% decline for the Standard & Poor's 500. Among my picks, Magnolia Oil & Gas did well, but Quidel Ortho and T. Rowe Price Group both had large losses.
I believe that technology stocks will continue to be strong performers in the years to come. Companies like Texas Instruments, ConocoPhillips, and Applied Materials have a lot of potential, and I'm bullish on their prospects. Cisco Systems is another company that I think is poised for success, and I'm bullish on its prospects as well.
