4 Stocks With Robust Net Profit Margins to Boost Portfolio Returns

Net profit represents the amount retained after all expenses, including costs, interest, depreciation and taxes. A strong net profit margin indicates effective cost control and operational strength, which are crucial for rewarding stakeholders and attracting investors and talented employees. A higher net profit margin compared to peers provides a company with a competitive edge.

Pros and Cons

Net profit margin helps investors gain clarity on a company’s business model in terms of pricing policy, cost structure and manufacturing efficiency. Hence, a strong net profit margin is preferred by all classes of investors.

However, this metric varies across industries, making direct comparisons challenging. While it is vital for traditional industries, it might be less relevant for technology companies.

Differences in accounting practices, especially with regard to non-cash expenses like depreciation and stock-based compensation, further complicate comparisons. Additionally, companies that rely heavily on debt may show lower net profits due to high interest expenses, limiting the metric's effectiveness in evaluating performance.

The Winning Strategy

A healthy net profit margin and solid EPS growth are the two most sought-after elements in a business model.

Apart from these, we have added a few criteria to ensure maximum returns from this strategy.

Screening Parameters

Net Margin 12 months – Most Recent (%) greater than equal to 0: High net profit margin indicates solid profitability.

Percentage Change in EPS F(0)/(F-1) greater than equal to 0: It indicates earnings growth.

Average Broker Rating (1-5) equal to 1: A rating of #1 indicates brokers’ extreme bullishness on the stock.

Zacks Rank less than or equal to 2: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally perform better than their peers in all types of market environments.

VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.

Here we discuss our four picks from the 13 stocks that qualified the screening:

Shinhan Financial Group is Korea's largest financial services company. The stock sports a Zacks Rank #1 and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Shinhan Financial Group’s 2026 earnings has moved upward by 51 cents to $8.53 per share over the past seven days. SHG’s earnings outpaced the Zacks Consensus Estimate in the last reported quarter by 7.30%.

ATI is a diversified specialty materials producer. It has two main business segments: High Performance Materials & Components, and Advanced Alloys & Solutions. The stock currently carries a Zacks Rank of 2 and has a VGM Score of B.

The Zacks Consensus Estimate for ATI’s 2026 earnings has been revised upward to $4.49 per share from $4.43 in the past 30 days. ATI outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.56%.

GEO Group is a diversified government service provider, specializing in design, financing, development and support services for secure facilities, processing centers and community reentry centers principally in the United States, Australia, South Africa and the United Kingdom. The stock carries a Zacks Rank #2 and has a VGM Score of B.

The Zacks Consensus Estimate for GEO Group’s 2026 earnings has remained unchanged at $1.20 per share over the past 60 days. GEO surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, the average surprise being 25.94%.

ASE Technology is a provider of semiconductor manufacturing services in assembly and testing. The stock carries a Zacks Rank #2 and has a VGM Score of B.

The Zacks Consensus Estimate for ASE Technology’s 2026 earnings has been revised upward by a penny to 83 cents per share over the past 30 days.

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.

Today you can access their live picks without cost or obligation.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research