Investors looking for high-quality stocks trading at reasonable valuations might want to focus on stocks with low price-to-earnings (P/E) ratios and high returns on capital (ROIC).
The P/E ratio is one of the most useful tools for spotting undervalued stocks, while return on capital is one of Warren Buffett’s favorite metrics for identifying businesses that generate strong profits on invested capital.
Here are 10 stocks that combine these two powerful metrics, offering potential for long-term growth and resilience. Stocks with a lower P/E ratio might have lower returns on capital, while higher-quality stocks with a high ROIC might trade at a higher P/E ratio.
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JD.com (JD)
- Market Cap: $49 billion
- Industry: Broadline Retail
- Analyst Upside: 67%
- P/E Ratio: 8
Company Overview: JD.com is a leading Chinese e-commerce company that offers a wide range of products, including electronics, apparel, and daily necessities. It operates through various segments such as JD Retail, JD Logistics, and JD Health, providing comprehensive services to consumers and businesses.
Business Strategy: JD.com focuses on enhancing its supply chain capabilities and technological infrastructure to improve customer experience. The company leverages its logistics network and data analytics to optimize operations and expand into new markets.
Recent Developments:
- Earnings & Profitability: JD.com reported strong financial performance in the first quarter of 2025, with earnings and sales surpassing expectations, driven by improved consumer spending in China.
- Business Growth Trends: The company launched a new product growth initiative, committing significant investments to support the introduction of thousands of new products, aiming to boost sales and market presence.
- Shareholder Returns: JD.com’s stock experienced a positive response following its earnings report, reflecting investor confidence in its growth strategy and financial health.
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Amcor plc (AMCR)
- Market Cap: $21 billion
- Industry: Containers and Packaging
- Analyst Upside: 28%
- P/E Ratio: 11
Company Overview: Amcor plc is a global packaging company that develops and produces flexible and rigid packaging solutions for various industries, including food, beverage, healthcare, and personal care. The company operates in over 40 countries and serves a diverse customer base.
Business Strategy: Amcor emphasizes innovation and sustainability in its product offerings, investing in research and development to create packaging solutions that meet environmental standards. The company aims to lead in recyclable and reusable packaging technologies.
Recent Developments:
- Earnings & Profitability: Amcor completed an all-stock combination with Berry Global, aiming to achieve significant synergies and enhance its market position in consumer and healthcare packaging solutions.
- Business Growth Trends: The merger is expected to provide multiple new growth opportunities, with identified synergies positioning Amcor to deliver substantial value to customers and shareholders.
- Shareholder Returns: Despite recent challenges, including concerns over raw material cost increases, Amcor continues to focus on delivering long-term value through strategic initiatives and operational efficiencies.
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Rio Tinto (RIO)
- Market Cap: $106 billion
- Industry: Metals and Mining
- Analyst Upside: 26%
- P/E Ratio: 10
Company Overview: Rio Tinto is a global mining group that supplies essential metals and minerals such as iron ore, aluminum, copper, and lithium. The company operates in various regions worldwide, contributing to urbanization and the transition to a low-carbon economy.
Business Strategy: Rio Tinto focuses on operational excellence, project development, and environmental, social, and governance (ESG) credentials. The company’s strategy includes diversification, innovation, and continuous improvement to meet the growing demand for greener metals.
Recent Developments:
- Earnings & Profitability: Rio Tinto’s CEO, Jakob Stausholm, announced his departure after nearly five years, during which he led the company through reputational recovery and strategic shifts towards clean energy minerals.
- Business Growth Trends: The company secured a 51% stake in Chile’s Altoandinos lithium project, marking its second major lithium venture in the country, as part of its efforts to diversify and strengthen its portfolio.
- Shareholder Returns: Under Stausholm’s leadership, Rio Tinto’s shares experienced significant returns, reflecting investor confidence in the company’s strategic direction and operational performance.
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TIKR Takeaway
Low P/E stocks with high return on capital offer investors a compelling blend of value and operational efficiency.
These companies tend to be attractively priced while demonstrating a strong ability to generate profits from their invested capital.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
