5 Must-Buy Efficient Stocks to Enrich Your Portfolio

Core Insights - Companies with favorable efficiency levels are more likely to attract investors due to their expected impressive returns, which are believed to correlate positively with price performance [1] Efficiency Ratios - Asset Utilization measures a company's ability to convert assets into output, calculated by dividing total sales over the past 12 months by the average total assets over the last four quarters. High asset utilization indicates efficiency [3] - Receivables Turnover is the ratio of 12-month sales to the four-quarter average receivables, showing a company's ability to extend credit and collect debts. A high ratio indicates effective collection of accounts receivables [10] - Operating Margin is the ratio of operating income over the past 12 months to sales over the same period, reflecting a company's ability to control operating expenses. A high operating margin suggests efficient management of operating costs [11] - Inventory Turnover is the ratio of the 12-month cost of goods sold (COGS) to the four-quarter average inventory, indicating a company's ability to maintain an appropriate inventory level. A high value suggests low inventory relative to COGS [15] Screening Criteria - Companies with efficiency ratios such as Inventory Turnover, Receivables Turnover, Asset Utilization, and Operating Margin greater than industry averages may indicate higher efficiency levels compared to peers [12] - The screening process narrowed down over 7,906 stocks to 14 based on the aforementioned efficiency criteria [17] Company Examples - Daktronics (DAKT) is a major supplier of electronic scoreboards and has an average four-quarter positive earnings surprise of 92.9% [5] - Advanced Drainage Systems (WMS) specializes in thermoplastic corrugated pipes and has an average four-quarter positive earnings surprise of 30.5% [12] - GENEDX HOLDINGS (WGS) leads in healthcare transformation through exome and genome testing, with an average four-quarter positive earnings surprise of nearly 17.9% [13] - Hess (HES) is a prominent oil and natural gas exploration company, boasting an average four-quarter positive earnings surprise of 35.7% [18]