Go for the ROE

We are in full pre-Holiday mode at Chez Melvin. This primarily consists of my wife running around decorating everything that moves, so I move around a lot lest I become light-adorned. Meanwhile, I caught up with friends around the country and had one conversation with a reader who mentioned one of my favorite undiscovered growth stocks, C&J Energy Services (CJES). It is not often, he pointed out, that you find a stock with a return on equity north of 40% trading at a single-digit earnings multiple.

I took that as a challenge. Return on equity has been shown by many investors form Phil Fischer to Aswath Damodaran to be one of the more important metrics of corporate valuation. If we can buy high ROEs on sale, we should have a good chance to earn outsized profits. I sat down this morning and ran a simple high ROE, low price-to-earnings ratio screen to see what I could find....536 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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