5 Of The Most Profitable Companies💹

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In today’s article, I’m giving you 5 of the most profitable companies in the world 🌍

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8 Profitability Ratios

The best investors find the most quality companies.

Can a company be considered quality if it’s not very profitable?

Here’s 8 important ratios to understand. I didn’t include any set benchmarks to aim for but I’d recommend comparing these metrics to competitors.

A Profitability Screen

I used Chartmill to perform a screen for the most profitable companies globally.

I focused on:

• Return on assets vs industry average

• Return on equity vs industry average

• Return on invested capital vs industry average

• Net profit margin growth vs industry average

• Net profit margin vs industry average

• Earnings per share growth vs industry average

Here’s 5 of the most profitable stocks globally:

1. Atkore Inc ATKR 0.00%↑

2. Sociedad Quimca y Minera de Chile S.A. SQM 0.00%↑

3. Lattice Semiconductor Corporation LSCC 0.00%↑

4. Innovative Solutions & Support ISSC 0.00%↑

5. Rai Way BIT:RWAY

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1 Investment Idea - SQM 0.00%↑

Here’s the One-Pager:

Description

SQM is a Chilean company that produces various commodities with a main focus on lithium (used in batteries for EV’s and energy storage systems). They also specialize in potassium and iodine mainly used in X-ray contrast media and solar salts.

Investment case:

1. Exceptional gross margin, net margin, ROIC, and ROE figures especially compared to industry averages. ROIC is currently at 50.4%.

2. Promising global lithium and potassium growth to 2030. Here’s an article by McKinsey highlighting a potential 27% annual growth in Lithium-ion battery demand.

3. Holds a competitive advantage in the ability to produce quality lithium, iodine, and potassium at lower costs due to Chilean assets.

4. Extremely well positioned to gain large returns as the demand for commodities such as Lithium reverses (as per expectations).

Risks:

1. Weak lithium market that has fallen over the last year due to oversupply in the market and poor demand from China’s electric vehicle sector. Lithium prices, and other commodity prices tend to follow the large mining cycles where cyclical downturns are followed by impressive recoveries. If you can catch these recoveries, you’ll likely do very well.

2. Mining rights to Salar de Atacama (SQM’s salt mines) will expire in 2030. SQM are currently investing heavily into capacity expansion to meet the demands.

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1 Graphic

Palo Alto Networks has been in the news a lot this week. Who knows why?

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1 In Depth X Thread

After studying Joel Greenblatt last week (see link below), I wanted to focus on screening out smaller cap stocks with lower PE ratios.

I found 5 of the highest quality small cap stocks you likely haven’t heard of:

How Joel Greenblatt Outperformed The Market💸

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1 Quote

The stock market is hot right now. Who knows where it’s going in the short term, but be careful.

“Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy.” - John Templeton

That’s it for the day

I hope you found a lot of value this article. As I develop on here, I’m sure there will be some changes to my structure and style, so please do leave some feedback for me!

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About the author

Make Money, Make Time is written by Oliver, a qualified CA, and investor who has read over 300 investment books, and spends more than 50 hours per week researching stocks so that you don’t have to. Let’s level-up together!