The data covers a range of measures and multiples including average return on equity (ROE) by industry. You can find it here.

For 2017 the average return on equity globally (adjusted for Research and Development spend) was 11.2% which is a significant increase on the 8.2% in 2016.

So where should we look for huge returns in 2018?

Surprisingly, none of the industries I would think of as earning high returns, like software and healthcare products, made it into the top 10.

The table below shows three of the highest returning industries, as well as the returns for relevant local ASX companies in that industry:

Source: Damodaran Online, Company annual reports

Now, if you had asked me to guess the top 5 high return industries, I would not have picked a single one of these. They are all highly competitive which is not usually conducive to above average returns.

I've even written in the past that I think Coca-Cola Amatil is a "sell" in part due to its decline in brand value in a mature market.

Household products is another industry which locally has suffered with cut-throat competition. Big players in the industry Asaleo Care Limited (ASX: AHY), McPherson's Limited (ASX: MCP) and Pental Limited (ASX: PTL) all lowered guidance in late 2017 with the common theme of pricing pressure from competition.

However there are certainly exceptions and as investors we want to find the great businesses within an industry which have etched out a niche to dominate.

Blackmores Limited (ASX: BKL) for instance stands out. The company reported an impressive return on equity in 2017 of 32% and has a history of strong returns. This is supported by being a high-volume seller with strong asset turnover (Revenue/Assets).

Similarly, although the Restaurant/Dining scene is undoubtedly tough, Domino's Pizza Enterprises Limited (ASX: DMP) has dominated with its low cost model, investment in technology and customer value creation.

What it all means

Having a high return on equity is certainly not argument enough for an investment in any of these companies. However for the likes of Blackmores and Domino's Pizza it does make a great starting point to dig further and identify potential moats or competitive advantages which may last into the future.

The post Where to find huge returns on equity in 2018 appeared first on The Motley Fool Australia.

The company announced that net sales for the first half of the 2018 financial year are forecast to decline to approximately $38.4 million compared to the $41.7 million earned for the first half of the 2017 financial year.

EBITDA is also expected to decrease to around $3.5 million versus the $4.9 million recorded in the prior period. The forecast for net profit after tax was also slashed to approximately $1.2 million, well down on the $2.3 million made during the prior period.

The company attributed the slump in domestic sales to new competitors entering its markets which has resulted in pricing pressure for its various products.

The company is responding with increased investment in marketing initiatives, price matches, and promotional activity to defend its market share in an increasingly difficult retail environment.

Pental also announced it is undertaking new product development and attempting to expand sales in Asia via new commercial and industrial channels to diversify the company's revenue streams.

In 2017, 81% of Pental's sales were in Australia, 18% in New Zealand and only 1% ($1.8 million) in Asia. Consequently, the company would need to significantly increase its sales in Asia to make up for the shortfall in the Australian market to have a material impact on its bottom line.

Foolish takeaway

Pental's share price dropped 17% yesterday after the disappointing trading update hitting a 52-week low of 48.5 cents. It currently trades at a 6.5% dividend yield with a high dividend payout ratio of 76%. Yesterday's announcement of a 48% drop in forecast net profit is likely to lead to a dividend cut in 2018.

The company does maintain a strong balance sheet with no debt and approximately $11.6 million in cash at year end. There is some potential in the Asia story, but near term investors may want to look elsewhere as the company struggles in an increasingly competitive market with falling prices and shrinking margins.

The post Why shares in Pental Ltd are printing 52-week lows appeared first on The Motley Fool Australia.

All we hear about is bank shares crashing, the price of oil is plummeting, and our miners are getting pummeled. But, what if we're not looking in the right places.

Instead of focusing on BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and National Australia Bank Ltd. (ASX: NAB), why not focus on a whole bunch of good news stories about shares that have had an amazing growth spurt over the past 3 months.

Some of them you'll recognise, and some you won't, but take some time to read a little about them as you might just find some great value opportunities.

Here they are, 10 shares that have grown by a minimum of 15% to 148% in the past 3 months.

(Source:Commsec)

Farm Pride Foods Ltd

Farm Pride produces cage, barn, and free range eggs and egg products. The company operates more than 6 farms and sources eggs from across Australia to process and pack approximately 8 million eggs every week. Its Keysborough site has egg processing plants that turn shell eggs into value-added egg products for supply into the food service industry.

a2 Milk Company Ltd (Australia)

a2 Milk produces and supplies a2 brand milk and milk related products. Products include Liquid Milk, Infant Formula and other dairy products like cream and yoghurt. a2 Milk is pure dairy milk which comes from cows specially selected to produce a2 beta-casein protein rather than A1.

BWX Ltd

BWX manufactures and sells beauty and personal care products. The company also manufactures beauty and personal care products for third party customers. Products include Sukin, DermaSukin, Uspa, Edward Beale & Renew Skincare. BWX sells its products through its wholesale distributor network, direct to wholesale pharmacy customers, and through specialty beauty retail outlets.

Australian Dairy Farms Group

Australian Dairy Farms is a farm owner and operator which produces fresh milk for sale to milk processors. The group basically operates three farms. The Brucknell Farms accommodate a total of 1,508 dairy livestock comprising an annual average of 935 milking cows and 483 calves and heifers. The company has also announced contracts for two other farms, known as Ignatios Farm, Glenfyne, and Brucknell No 3 Farm.

Metcash 

Metcash Limited is a wholesale distributor which supplies dry grocery, perishable and general merchandise to IGA, Foodland, FoodWorks and Lucky 7 (convenience) stores. The company also distributes liquor products to Australian Liquor Marketers.

Pental Ltd

Pental manufactures and distributes home care and personal care products including soaps, detergents, bleach and other fast moving consumer goods. It supplies its own brands including Country Life, Natural Selections, Sunlight, Velvet, Knights Castile and Lux Flakes, together with the sale of icon brands such as Jiffy Firelighters, Softly premium wool wash, Huggie fabric softener, Country Homestead wool mix, Sureguard moth and silverfish repellent, Hi Speed iron cleaner and Close Up and Aim toothpastes.

Bellamy's Australia Ltd

Bellamy's produces a range of organic food and formula products for babies and toddlers. It offers over 30 baby and toddler products though supermarket chains, pharmacy chains and independent stores. Products include baby formula, baby food pouches, dry cereals, teething rusks, pasta, fruit snacks and fruit bars.

Treasury Wine Estates 

Treasury is a global wine company with a portfolio that includes wine brands: Penfolds, Beringer, Lindemans, Wolf Blass and Rosemount Estate and more. The company owns over 11,000 hectares of vineyards, with more than 3,000 winemakers, viticulturists, sales, distribution and support staff. Treasury's wines are sold in more than 70 countries around the world.

Freedom Foods Group 

Freedom Foods is a diversified food company operating in the Health and Wellness sector. The company provides a range of products to meet specific dietary or medical conditions including allergen free (i.e. gluten free, wheat free, nut free) products. Other products include a range of canned seafood covering sardines, salmon and specialty seafood, and a range of UHT (long life) food and beverage products including liquid stocks, soy, rice, almond and dairy milk beverages.

Wesfarmers 

Wesfarmers is a diversified business, operating supermarkets and department stores.The company is best known for its ownership of retail giants Coles, Bunnings, Officeworks, Target and Kmart.

The post These 10 growth shares crushed the market over the last 3 months appeared first on The Motley Fool Australia.

Mike King: Brierty Limited (ASX: BYL)

As an engineering and contracting business, Brierty is the baby thrown out with the bath water of the mining services sector.

The company pays a decent fully franked dividend yield of 5.8% and expects to see revenues rise by at least 20% in the next financial year. It is currently trading on an undemanding P/E of 6.3x trailing earnings.

Additionally, Brierty has $26 million of net cash on hand, which is slightly under half the company's current market cap. The company also has more than $570 million in work in hand and expects to pick up more contracts this financial year.

Motley Fool analyst Mike King does not own shares in Brierty.

Sean O'Neill:  Australian Bauxite Ltd (ASX: ABX)

Bauxite prices are already at record highs and expected to go higher thanks to reduced Indonesian sales and increased demand in China and the Middle East.

Australian Bauxite is perfectly positioned to capitalise on increased demand with an ambition to become China's sixth largest bauxite supplier. The company also has over 100 million tonnes in high-grade bauxite resources discovered already.

The key obstacle is funding initial mine construction at a cost of $12 million when the company only has $2 million in cash. I hope for a capital raising in order to drive share prices lower, though private funding is equally likely. This is a speculative investment.

Motley Fool contributor Sean O'Neill owns shares in Australian Bauxite Ltd.

Peter Andersen: Pental Ltd (ASX: PTL)

Being a domestic supplier to the monster supermarket chains is no bundle of joy, however Pental is battle-hardened after a near collapse a couple of years ago. This was mainly caused by an unfortunate investment in chemical maker Symex.

Pental owns or licenses several well known brands, including White King, Velvet, Pears, Martha's Wool Mix, Lux and Softly. Over the past two years, Pental has rationalised operations and paid off debt. Importantly, it has simultaneously invested heavily in new manufacturing facilities and disciplined marketing. As a result the company is now poised for growth.

With no net debt and selling at a tad over 10 times 2014 earnings, I think Pental is an attractive buy.

Motley Fool contributor Peter Andersen owns shares in Pental Limited.

Aryan Norozi: Shine Corporate Ltd (ASX: SHJ)

Legal eagle Shine Corporate Ltd is an Australian litigation company with significant interests in the personal injury market. Since it listed in 2013, Shine has provided sensational returns to its investors.

Shine's recent growth endeavours look very enticing, and its recent shift from its native ground in Queensland to other states like Western Australia is a smart way to gain more exposure to thriving economies and escape the harsher regulatory hurdles in Queensland's personal injuries sector.

Its recent acquisitions of Emanate Legal and Stephen Browne personal injury lawyers in Western Australia widen its market share and set it up for some quality future growth.

Shine boasts an extremely healthy balance sheet and trades on a modest price-to-earnings ratio of 16. I think Shine is a perfect candidate for long-term investors. 

Motley Fool contributor Aryan Norozi owns shares in Shine Corporate.

Ryan Newman: Veda Group Ltd (ASX: VED)

It was only in June that Veda Group last featured as my top stock pick, based on the strength of its business model, a compelling valuation and the favourable macroeconomic tailwinds likely to boost earnings over the coming years (low interest rates, strong credit growth).

While its price has gone up marginally since that time, its recent full-year earnings report all but confirmed my expectations of a very bright future. It smashed prospectus forecasts for earnings and profitability and declared a dividend twice as large as expected at 4 cents. Veda is a stock to buy and hold for years to come.

Motley Fool contributor Ryan Newman owns shares in Veda Group Ltd.

Tim McArthur: Virtus Health Ltd (ASX: VRT)

Back on 1 April, I selected Virtus Health as my Top Stock for April. The share price initially rallied from around $7.30 when the article was published to a high in late June of $8.80 – a gain of about 20%. Since then the share price has given up much of those gains with the stock now trading back around $7.80

Interestingly, since my pick back in April, Virtus has had three positive announcements. The first two were very appealing expansion plans – namely the 70% acquisition of Ireland's leading IVF provider and the establishment of a Virtus Fertility Clinic in Singapore. The third was its full year pro-forma results, which showed a 16.8% increase in profit.

Given the good news flow over the past few months and the lack of a re-rating, I'm reiterating my view that the stock holds appeal at current prices.

Motley Fool contributor Tim McArthur does not own shares in the companies mentioned in this article.

Owen Raszkiewicz: Shine Corporate Ltd (ASX: SHJ)

I second the recommendation of Shine Corporate Ltd, a law firm currently pursuing both an acquisitive and organic growth strategy. It, along with some of its rivals, is focused on consolidating the lucrative personal injury market. It has also begun moving into 'emerging practice areas' such as product liability, professional negligence, environmental law, disability insurance and superannuation, landowner rights, asbestos and more.

In its recent full-year result, revenue increased 10%, or $10.3 million and emerging practice areas accounted for $5.8 million of said increase. With an EBITDA margin of nearly 30% and modest price tag, Shine Corporate is a standout buy for long-term investors.

Motley Fool contributor Owen Raszkiewicz owns shares in Shine Corporate.

M2 Group Ltd (ASX: MTU)

Of all the companies to report in August this one was perhaps the highlight. The management team is impressive and seems to have an unrelenting focus on growing the business at a rapid pace. Given the company is now moving into the utilities space, I will not be surprised if it makes a big success of this like it has done with telecommunications and internet services.

Importantly, the last quarter of the prior financial year also saw mobile subscriber growth return, which suggests the availability of a 4G network has halted the customer decline. For the year ahead, the business has forecast 8%-9% revenue growth and 15%-20% profit growth. It pays an attractive fully franked dividend and management's evident focus on shareholder returns makes it a solid opportunity.

Motley Fool contributor Tom Richardson owns shares in M2 Group. 

Andrew Mudie: UXC Limited (ASX: UXC)

UXC limited is a mid-cap IT company offering consulting services, applications (cloud), and IT Infrastructure in Australia, New Zealand, the U.S., Fiji, India and Vietnam. Group revenue rose 6% in FY14, while earnings fell 30% as a result of five acquisitions.

The most recent earnings puts the company on a PE ratio of 15 and yield of 4.5%, however UXC's management is aiming to almost double margins over the next two years. This would see profit increase by between 100% and 200% and put the company on a FY16 PE ratio of just 9 and yield of 7%!

UXC is the market leader in many regions and offers a full suite of solutions. If the IT sector bounces back strongly UXC will be leading the charge.

Motley Fool contributor Andrew Mudie does not own shares in UXC. You can find Andrew on Twitter @andrewmudie

The post Top stock picks for September appeared first on The Motley Fool Australia.

Well, you can with Pental Limited (ASX: PTL); whose range includes White King, Softly, Velvet, Pears, Huggies, Pears, Jiffy, Little Lucifer, Lux – and the purchase of one million shares would only cost you $30,000! The huge amount of current and prospective shares (assuming all options are exercised) totals over two billion, and a capital consolidation is scheduled when the options are sorted out.

Previously known as Symex the company was devastated as cheap imports undermined its domestic chemical manufacturing viability. All looked lost by 2012 when equity was wiped out. Luckily Pental had bought the iconic White King brand from Sara Lee in 2011 – and this was to soon aid the resurrection of the company.

In a good story, its bank Australia and New Zealand Banking Group (ASX: ANZ) supported the company and forgave $10 million of debt. A large cornerstone investor was found and Pental sold all assets bar the consumer staple brands and associated manufacturing facilities. Today it is investing in new facilities, hiring more people and expanding the product range – however the market is yet to recognise the potential in this stock.

Pental continues to sell below book value and now has a very low debt to equity ratio of 7%. With a market capitalisation of $53m the 2015 price-earnings ratio is estimated to be 9. Dividends are expected to be re-established in the upcoming financial year. In addition, several important initiatives are underway to boost revenues and profits over the medium and long term.

1. Introduction of innovative new products across major well-known brand lines.
2. Further capital investment in manufacturing and packaging facilities; improving productivity and margins.
3. Exploring well priced opportunities in potential bolt-on acquisitions.
4. Expanding presence in the New Zealand market.
5. Contracts signed to supply white label bleach products to Aldi, Coles and Woolworths.

In summary Pental (3c) is poised to deliver good returns from its significant niche in the reliable consumer staples sector. In my view Pental is a strong buy.

The post Is this the ASX's most promising small-cap business? appeared first on The Motley Fool Australia.

Keen followers of investment great Warren Buffett will note his penchant for buying companies that sell FMCG (Fast Moving Consumer Goods) and have brand name strength. The Consumer Staples sector is home to many brands and FMCG companies.

1)      Contrarian – While the rest of the market appears to be selling Coca-Cola Amatil Ltd (ASX: CCL), for investors prepared to take a contrarian view of the beverage bottler and distributor now may turn out to be an opportune time to add this quality stock to a long-term portfolio.

2)      Defensive – Woolworths Limited (ASX: WOW) is an easy choice for investors looking for a high quality business that offers a defensive stream of earnings and dividends.

3)      Growth – The recent battle for acquiring Warrnambool Cheese & Butter highlighted to investors the inherent value in peer Bega Cheese Ltd (ASX: BGA). Bega's share price has been significantly re-rated as a result; this re-rating not only reflects the strategic appeal of its assets but also reflects the future growth potential, particularly in Asia, of its dairy products.

4)      Speculative – Pental Ltd (ASX: PTL) has managed to survive what has been a torrid few years for the manufacturer of household brands including White King, Pears, Softly and Jiffy. While Pental continues to face a competitive and difficult operating environment, there could be significant upside in the stock if a turnaround in the company's fortunes can be achieved.

5)      Value – Treasury Wine Estates Ltd's (ASX: TWE) share price has fallen 35.5% in the past 12 months and is currently at $3.69. Treasury boasts an impressive stable of wine brands and with the share price now reflecting the problematic North American division, there could be value at current levels.

Foolish takeaway

There are many ways to put together a diversified portfolio, perhaps the most important aspect of stock selection is to remain within your 'circle of competence'. If you have a good understanding of Consumer Staple businesses, while you may not completely want to limit your portfolio to this one sector, there are a number of different approaches you can use – such as value and growth – to create a diversified portfolio from within the sector.

The post Your instant 5-share Consumer Staples portfolio appeared first on The Motley Fool Australia.