5 Profitability Stocks to Make the Most of Trump Bump

An image of a pen pointing at a stock chart
Credit: Shutterstock photo

President Donald Trump promised to lower the overall tax burden on American business in the coming weeks and the key U.S. indexes cheered up. Under Trump's new tax plan, federal taxes will be reduced by $4.4 trillion to $5.9 trillion over a decade. Higher infrastructure spending and financial de-regulation policies should also benefit companies already with stable profitability.

Profitability analysis is one of the best methods to evaluate the pricing strategies of a company. With Trump's economic policies expected to lower the overall operating costs of a company, profitability analysis should be used to select the best performing companies. It will not only to assess a company's ability to generate strong returns but also meet all its business expenses.

One of the best ways to measure a company's profitability is ratio analysis. There are three key profitability ratios - gross income ratio, operating income ratio and net income ratio. From these, we have chosen the most transparent and widely used net income ratio.

Net Income Ratio

Net income ratio gives us the exact profit level of a company. It reflects the percentage of net income to total sales revenue. Using net income ratio, one can determine a company's capability to clear all its operating and non-operating expenses from its sales revenue. A higher net income ratio usually implies a company's ability to generate ample sales revenue and successfully manage all its business functions.

Screening Parameters

Net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy.

Zacks Rank equal to #1: Only Zacks Rank #1 (Strong Buy) stocks are allowed. With the Zacks Rank proving itself to be one of the best rating systems out there, this is a great way to start things off. You can see the complete list of today's Zacks #1 Rank stocks here.

12-Month Trailing Sales and Net Income Growth Higher than X Industry: Stocks that possess higher sales and net income growth in the last 12 months showcase better financial performance.

12-Month Trailing Net Income Ratio Higher than X Industry: High net income ratio indicates a company's solid profitability.

% Rating Strong Buy greater than 70%: This indicates that 70% of the analysts covering these stocks are optimistic.

Here are five of the seven stocks that qualified the screening:

Milacron Holdings Corp.MCRN manufactures, distributes and services engineered and customized systems within the plastic technology and processing industry. It has an average four-quarter earnings surprise of 5.7%.

Rice Midstream Partners LPRMP is a midstream energy company. It has an average four-quarter earnings surprise of 44.5%.

Calavo Growers, Inc.CVGW engages in the procurement and marketing of avocados and other perishable foods along with the preparation and distribution of processed avocado products.It has an average four-quarter earnings surprise of 11.8%.

Cytokinetics, IncorporatedCYTK is a late-stage biopharmaceutical company focused on discovering, developing and commercializing first-in-class muscle activators as potential treatments for debilitating diseases.It has an average four-quarter earnings surprise of more than 100%.

II-VI IncorporatedIIVI designs, manufactures and markets optical and opto-electronic components, devices and materials for infrared, near-infrared, visible light, x-ray and gamma ray instrumentation. It has an average four-quarter earnings surprise of 59.2%.

While backtesting over a two-year timeframe (Feb 06, 2015 to Feb 03, 2017), a portfolio following this strategy provided a total return of 22% compared with the S&P 500's return of 8.5%. Thus, this strategy may prove profitable for those looking to beat the market.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today .

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks' portfolios and strategies are available at:

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Calavo Growers, Inc. (CVGW): Free Stock Analysis Report

II-VI Incorporated (IIVI): Free Stock Analysis Report

Cytokinetics, Incorporated (CYTK): Free Stock Analysis Report

Rice Midstream Partners LP (RMP): Free Stock Analysis Report

Milacron Holdings Corp. (MCRN): Free Stock Analysis Report

To read this article on click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More