Investing in stocks that have the potential to multiply over the long term requires careful analysis of certain underlying trends. Return on Capital Employed (ROCE) is a key metric to consider, as it indicates how efficiently a company generates profits from its capital. Kao Hsing Chang Iron & Steel (TWSE:2008) is a company that shows promise in this area, with a trend of increasing ROCE.
ROCE is calculated by dividing Earnings Before Interest and Tax (EBIT) by Total Assets minus Current Liabilities. For Kao Hsing Chang Iron & Steel, the ROCE is currently at 1.6%, which is lower than the industry average but showing signs of improvement. The company has recently become profitable after experiencing losses in the past, indicating that its investments are starting to pay off.
Additionally, Kao Hsing Chang Iron & Steel has increased its capital employed by 116%, pointing towards growth and potential profitability in the future. The company’s decreasing ratio of current liabilities to total assets also suggests improved financial health and reduced reliance on short-term funding sources.
Investors have already seen a total return of 111% over the last five years, indicating confidence in the company’s future prospects. While there are risks to consider, further due diligence on Kao Hsing Chang Iron & Steel could potentially lead to significant returns for investors. For a more in-depth analysis, including valuation estimates and risks, interested parties can access a free analysis on Simply Wall St’s website.
