NVIDIA & 2 Profitable Stocks to Buy in September for Big Upside

September has historically been one of the worst-performing months for the U.S. stock market, and this year could see heightened volatility due to rising oil prices, higher Treasury yields and growing uncertainty about the Federal Reserve’s next interest rate decision. Given this backdrop, investors may benefit from adopting a cautious approach and focusing only on those stocks that consistently generate strong profits after accounting for both operating and non-operating expenses. 

Such companies are generally better positioned to withstand unfavorable market conditions than those reporting losses. To assess a company’s profitability, investors often use profitability ratios, which help measure its ability to generate consistent and sustainable earnings. 

On that note, NVIDIA Corporation NVDA, BrightSpring Health Services, Inc. BTSG and Comfort Systems USA, Inc. FIX stand out as the most profitable stocks, supported by strong net income ratios and upside potential.

Why Net Income Ratio Matters to Investors 

The net income ratio is a key indicator of a company’s overall profitability. It reflects the percentage of net income relative to total sales revenues. Using the net income ratio, one can assess a firm’s ability to cover operating and non-operating expenses with revenues. A higher net income ratio usually implies a company’s ability to generate sufficient revenue and manage all business functions effectively. 

Stock Screening Criteria Used in the Research Wizard 

The net income ratio is not the only indicator of future winners. So, we have added a few more criteria to arrive at a winning strategy. 

Zacks Rank equal to #1: Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Trailing 12-Month Sales and Net Income Growth Higher than X Industry: Stocks that have witnessed higher-than-industry sales and net income growth in the past 12 months are positioned to perform well. 

Trailing 12-Month Net Income Ratio Higher than X Industry: A high net income ratio indicates a company’s solid profitability. 

Percentage Rating Strong Buy greater than 70: This indicates that 70% of the current broker recommendations for the stock are Strong Buy. 

These few parameters have narrowed the universe of more than 7,685 stocks to only 15.

Here are three of the 15 stocks that qualified for the screening: 

NVIDIA  

NVIDIA is a leading AI infrastructure company operating across global markets. NVDA’s 12-month net profit margin is 63.7%. Its expected earnings growth rate for the current year is 93.3% (read more: NVIDIA vs. AMD: Only One AI Stock Is a Solid Buy Now). 

BrightSpring Health Services 

BrightSpring Health Services provides home- and community-based healthcare services across the United States. BTSG’s 12-month net profit margin is 2.6%. Its expected earnings growth rate for the current year is 82%. 

Comfort Systems  

Comfort Systems provides mechanical and electrical installation, maintenance and repair services in the United States. FIX’s 12-month net profit margin is 12.8%. Its expected earnings growth rate for the current year is 60.7%. 
 

 

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This article originally published on Zacks Investment Research (zacks.com).

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