4 Must-Buy Efficient Stocks to Buy for Solid Gains Amid Volatility

Core Viewpoint - Companies with favorable efficiency levels are more likely to attract investors due to their expected impressive returns, which are believed to be positively correlated with price performance [1] Efficiency Ratios - The efficiency ratio is a key indicator of a company's financial health, analyzing how effectively a company utilizes its assets and liabilities [1] - Popular efficiency ratios to consider when selecting stocks include Receivables Turnover, Asset Utilization, Inventory Turnover, and Operating Margin [2][3][4][5] Receivables Turnover - This ratio measures a company's ability to extend credit and collect debts, with a high ratio indicating effective collection of accounts receivable [2] Asset Utilization - This ratio indicates a company's capability to convert assets into output, with a higher ratio suggesting greater efficiency [3] Inventory Turnover - This ratio assesses a company's ability to maintain an appropriate inventory level, with a high value indicating low inventory relative to cost of goods sold (COGS) [4] Operating Margin - This measure reflects a company's ability to control operating expenses, with a higher ratio indicating more efficient management compared to peers [5] Screening Criteria - A favorable Zacks Rank (1 Strong Buy) is added to the screening process to enhance profitability [6] - The screening criteria narrowed down over 7,906 stocks to 10, focusing on those with efficiency ratios above industry averages [7] Selected Companies - Deckers Outdoor (DECK): A leading designer and producer of niche footwear with a four-quarter average positive earnings surprise of 36.8% [7] - Flexsteel Industries (FLXS): Engaged in the design and manufacture of upholstered furniture, with a four-quarter average positive earnings surprise of 19.8% [9] - Commerce Bancshares (CBSH): A bank holding company providing a range of banking services, with a four-quarter average positive earnings surprise of 10.2% [10] - BancFirst (BANF): Focuses on commercial banking services for retail customers and small to medium-sized businesses, with a four-quarter average positive earnings surprise of 7.9% [11]