Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



7 of the Most Efficient Companies on the Planet

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

These days, it's not all about working hard. It's more about working hard and efficiently. Why not apply that strategy to your investments?

To measure a company's efficiency, you can examine its return on equity (ROE). This ratio is composed of a company's profit margin multiplied by its asset turnover, multiplied by its financial leverage. It measures how efficiently the company employs its owners' capital. In a nutshell, it measures your bang per buck as an investor.

Take Philip Morris International (NYSE: PM  ) , which rocks a whopping ROE of 95.8% over the past four quarters. Or look at Foster Wheeler (Nasdaq: FWLT  ) , which boasts an ROE of 52.4%.

Companies can juice their ROE by employing more debt, so it's important to consider a company's debt level when looking at ROE. All else being equal, though, the higher the ROE, the better -- a higher ratio means a more efficient company, which means a more effective executive team when it comes to managing the business. It's companies like these you should consider for your portfolio.

To uncover some of the most efficient companies around, I ran a screen using The Motley Fool's CAPS screening tool. I looked for companies with:

  • CAPS ratings of five stars, the highest granted by our CAPS community.
  • ROEs of 25% or greater.
  • Market caps of $500 million or greater.

And voila! Here's what popped up from my screen:


Market Cap (in billions)

Return on Equity (TTM)

Foster Wheeler



Gilead Sciences (Nasdaq: GILD  )



Infosys Technologies (Nasdaq: INFY  )



Partner Communications (Nasdaq: PTNR  )



PepsiCo (NYSE: PEP  )



Philip Morris International



Data from Motley Fool CAPS. TTM = trailing 12 months.

While the stock screener is a great tool, it should only be the first step in your investment research. Double-checking why a company might have a really high ROE is a good first step. For instance, Philip Morris' ROE is so high because the level of equity has been lowered thanks to a massive share buyback program over the past couple of years.

Further steps -- for example, examining other levers of specific companies, such as return on invested capital, liquidity, and debt-to-equity ratios -- will also help you determine if a company is right for your portfolio. When you include those other metrics in your analysis, you'll get a fuller picture of whether that company is worth buying.

Start increasing the efficiency of your investments at Motley Fool CAPS today. Let the collective wisdom of our 145,000-member-strong investment community help you make better investing decisions.

For related Foolishness:

Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. You can follow her on Twitter. Philip Morris International is a Motley Fool Global Gains recommendation. Pepsi and Partner Communications are Income Investor picks. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1119174, ~/Articles/ArticleHandler.aspx, 10/28/2016 6:05:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
FWLT.DL $0.00 Down +0.00 +0.00%
Foster Wheeler CAPS Rating: ****
GILD $73.88 Down -1.95 -2.57%
Gilead Sciences CAPS Rating: *****
INFY $15.29 Down -0.07 -0.46%
Infosys Technologi… CAPS Rating: *****
PEP $107.07 Up +0.44 +0.41%
PepsiCo CAPS Rating: ****
PM $96.31 Up +0.53 +0.55%
Philip Morris Inte… CAPS Rating: ****
PTNR $4.40 Up +0.07 +1.62%
Partner Communicat… CAPS Rating: ****