Winter is NOT Coming for Your Investments: Khaleesi's Guide to ROE in the S&P 500!

A Queen's Decree on Market Scarcity!

My loyal subjects (and investors!) Daenerys Targaryen First of Her Name Queen of Meereen Queen of the Andals and the Rhoynar and the First Men Khaleesi of the Great Grass Sea Breaker of Chains and Mother of Dragons addresses you! I have received word from the Citadel – or rather Citi Research – that quality companies with strong returns are becoming harder to find. Apparently Return on Equity or ROE that metric beloved by maesters and market watchers alike is 'increasingly scarce' among those so called 'big name stocks.' As if finding a trustworthy Hand wasn't difficult enough!

Winter Is Coming...For Your Profits?

Scott Chronert a strategist who probably couldn't hatch a dragon egg if his life depended on it notes that companies expected to improve their ROE through margin expansion and asset turnover are dwindling faster than my patience with kneeling lords. He blames 'softer macros and trade concerns.' Honestly it sounds like the usual whining of the merchant class. But I Daenerys always heed wise counsel – even if it comes from someone who hasn't ridden a dragon.

The Positive ROE Trend: My Kind of Basket!

Fewer companies are making the cut in Citi's 'Positive ROE Trend' basket a collection of stocks with ROE gains driven by efficiency. Only 90 names this quarter compared to over 100 previously! But fear not for even in this supposed scarcity there are still fiery dragons to be found. These baskets Chronert claims 'continue to trade at justifiable valuations.' Which is to say they're worth their weight in gold... or perhaps dragon scales.

Lockheed Martin: The New Iron Throne?

First on the list and seemingly poised to conquer the ROE charts: Lockheed Martin. This defense company which I imagine builds weapons strong enough to rival dragon fire is expected to have the highest ROE next year among S&P 500 companies. An ROE of 93.90% by 2026? Impressive! They're seeing increased defense spending from those quarrelsome European countries and the U.S. preparing perhaps for their own Long Night. Frank St. John their COO speaks of a 'three to five year surge in defense spending.' So invest wisely and let them be your shield!

Tapestry and Ralph Lauren: Fit for a Queen!

Next we have Tapestry and Ralph Lauren. These retail giants boast strong ROE for next year 61.4% and 31.9% respectively. Tapestry with its Coach Kate Spade and Stuart Weitzman brands is apparently a favorite on Wall Street. I imagine even a Dothraki warrior appreciates a well crafted saddlebag. JPMorgan is 'overweight' on Tapestry citing multiyear growth for Coach. So if you wish to dress like a Queen (or at least accessorize like one) perhaps Tapestry is a worthy investment.

Netflix Broadcom and Chipotle: The Unburnt of Your Portfolio!

Finally we have Netflix Broadcom and Chipotle. Broadcom and Chipotle are projected to have ROEs of over 43% by the end of 2026. Broadcom with its AI chips expects growth to 'sustain into fiscal 2026.' As for Netflix even in Westeros one needs entertainment after a long day of conquering. And Chipotle? Well even a dragon queen gets the munchies. So heed my words and may your portfolio be as strong and resilient as my dragons!