Core Insights - The article emphasizes the importance of efficiency levels in assessing a company's potential for profitability and price performance [1] - It highlights specific efficiency ratios that can be used to evaluate companies, including Receivables Turnover, Asset Utilization, Inventory Turnover, and Operating Margin [2][3][4][5] Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a higher ratio indicating better performance [2] - **Asset Utilization**: This ratio assesses how effectively a company converts its assets into sales, with higher values suggesting greater efficiency [3] - **Inventory Turnover**: This ratio indicates how well a company manages its inventory relative to its cost of goods sold, with higher values reflecting better inventory management [4] - **Operating Margin**: This ratio evaluates a company's ability to control operating expenses, with higher values indicating more efficient expense management [5] Screening Criteria - The article mentions that companies were screened based on the aforementioned efficiency ratios being greater than industry averages, narrowing down the selection to eight stocks [7] - A favorable Zacks Rank of 1 (Strong Buy) was also included in the screening criteria to enhance profitability [6] Selected Companies - **Microvast (MVST)**: A technology company specializing in lithium-ion battery solutions, with an average four-quarter earnings surprise of 88.8% [8] - **Companhia de saneamento Basico Do Estado De Sao Paulo Sabesp (SBS)**: Provides public water and sewage services in Sao Paulo, with an average four-quarter earnings surprise of 30.8% [8] - **CarGurus (CARG)**: An online automotive marketplace with an average four-quarter earnings surprise of nearly 11.8% [9] - **AptarGroup (ATR)**: A global supplier of innovative packaging solutions, with an average four-quarter earnings surprise of nearly 7.3% [9]

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 how well a company converts its assets into sales, with higher values suggesting greater efficiency [3] Inventory Turnover - This ratio assesses a company's ability to manage inventory relative to its cost of goods sold, with high values indicating efficient inventory management [4] Operating Margin - This measure reflects a company's ability to control operating expenses, with higher values indicating better expense management compared to peers [5] Screening Criteria - A favorable Zacks Rank (Zacks Rank 1) is included in the screening process to enhance profitability [6] - The screening criteria narrowed down over 7,906 stocks to eight, focusing on companies with efficiency ratios above industry averages [7] Selected Stocks - The top five stocks identified through the screening process include: - **Allot (ALLT)**: Provider of network intelligence and security solutions, with an average four-quarter positive earnings surprise of 106.7% [8] - **Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS)**: Provides public water and sewage services, with an average four-quarter positive earnings surprise of 30.8% [10] - **Lindsay (LNN)**: Offers water management and road infrastructure products, with an average four-quarter positive earnings surprise of 17.9% [11] - **Equity Bancshares (EQBK)**: A bank holding company providing financial services, with an average four-quarter positive earnings surprise of 17.3% [12] - **Griffon (GFF)**: Engaged in manufacturing consumer and professional products, with an average four-quarter positive earnings surprise of 14.7% [13]