5 Stocks With High ROE to Buy as Markets Bask in Economic Strength

Market Overview - The broader equity markets have remained resilient despite President Trump's tariff threats, trading in record territory, primarily driven by a tech rally [1] - Blue-chip tech firms have shown solid gains due to a positive start to the earnings season and advancements in AI monetization [1] - The Federal Reserve's decision to maintain interest rates in the range of 3.5% to 3.75% has also supported the uptrend, reflecting economic strength and stable job market conditions [1] Investment Opportunities - Investors are advised to focus on "cash cow" stocks that provide higher returns, with an emphasis on identifying stocks with high return on equity (ROE) [2] - High ROE indicates that companies are effectively reinvesting cash at a high rate of return, making them attractive investment options [3][4] - Stocks identified with high ROE include Arista Networks, Corning, Banco Bilbao Vizcaya Argentaria, The TJX Companies, and TE Connectivity, all of which have strong fundamentals and consistent earnings surprises [2][8] Screening Parameters - The primary screening parameters for identifying cash-rich stocks include cash flow greater than $1 billion and ROE exceeding the industry average [5] - Additional metrics used for screening include price/cash flow ratio lower than the industry average and return on assets (ROA) greater than the industry average [6] - A five-year EPS historical growth greater than the industry average and a Zacks Rank of 1 or 2 are also considered to ensure strong performance [7] Company Profiles - Arista Networks: Engaged in cloud networking solutions with a long-term earnings growth expectation of 20.1% and a trailing four-quarter earnings surprise of 10.2% [9][10] - Corning: Focuses on advanced glass technologies with a long-term earnings growth expectation of 18.8% and a trailing four-quarter earnings surprise of 4.4% [11] - Banco Bilbao: Provides a range of banking services with a long-term earnings growth expectation of 12% and a trailing four-quarter earnings surprise of 5.7% [12] - The TJX Companies: A leading off-price retailer with a long-term earnings growth expectation of 10.2% and a trailing four-quarter earnings surprise of 5.5% [13][14] - TE Connectivity: Designs connectivity solutions with a long-term earnings growth expectation of 12% and a trailing four-quarter earnings surprise of 7.5% [15][16]