4 Stocks With a Solid Net Profit Margin Worth Buying

Core Insights - Investors favor businesses with consistent profitability, measured effectively by net profit margin, which indicates a company's efficiency in converting sales into profits [1][2] - A higher net profit margin compared to peers provides a competitive advantage for companies [2] Summary by Sections Net Profit Margin - Net profit margin is calculated as Net Profit/Sales * 100, reflecting the amount retained after all expenses [1] - A strong net profit margin is crucial for attracting investors and skilled employees, enhancing overall business value [1] Pros and Cons - Net profit margin offers clarity on a company's business model, including pricing, cost structure, and manufacturing efficiency, making it a preferred metric for investors [3] - However, the metric varies significantly across industries, and its effectiveness can be diminished by factors such as accounting treatments and debt financing [3] Winning Strategy - A healthy net profit margin combined with solid earnings per share (EPS) growth is essential for maximizing returns [4] Screening Parameters - Criteria for screening include a net margin of at least 0%, positive EPS growth, a broker rating of 1 (extreme bullishness), a Zacks Rank of 1 or 2 (strong buy or buy), and a VGM Score of A or B for optimal upside potential [5] Company Highlights - Virco Manufacturing Corporation (VIRC): Zacks Rank 1, VGM Score A, with a fiscal 2024 earnings estimate of $1.35 per share, reflecting a 20.5% increase in the last 60 days and an average surprise of 188.6% over the last four quarters [6] - H&E Equipment Services, Inc. (HEES): Zacks Rank 1, VGM Score A, with a 2023 earnings estimate of $4.50 per share, maintaining a 21.4% average surprise over the last four quarters [6] - Alpha Metallurgical Resources, Inc. (AMR): Zacks Rank 1, VGM Score A, with a 2023 earnings estimate of $44.60 per share, an 8.8% increase in the last 30 days, and a 9.6% average surprise [7] - Photronics, Inc. (PLAB): Zacks Rank 1, VGM Score B, with a fiscal 2024 earnings estimate of $2.60 per share, reflecting a 15.6% increase in the last 60 days and an average surprise of 8.5% [8]