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10 Stocks With Highest Profitability Ratios

1. Spreadtrum Communications (SPRD) is a China-based fabless semiconductor company with a market cap exceeding $1 billion. It combines its semiconductor design expertise with its software development capabilities to deliver highly integrated baseband processors with multimedia functionality and power management for the wireless communications market.

For the last 12 months, the company's ROA was 23.91%, while total asset turnover ratio was 1.13. For the same period, ROE and ROCE were 58.82% and 84.22%, respectively. Currently, the stock is trading at 8.66 times earnings, vs. the industry P/E of 25.7, data compiled by Bloomberg show.

For the third quarter, the company reported total revenue of $184.8 million, up 92% year-over-year and 15.4% quarter-over-quarter. Net income rose to $39.3 million from $32.5 million in the previous year's quarter and $19.5 million in the 2010 third quarter. Net income per diluted ADS grew to 75 cents from 37 cents in the prior year quarter.

Sales volume of 2G/2.5G baseband and radio frequency bundle semiconductors increased 19.1% quarter-over-quarter and 121.7% year-over-year. Sales volume of 3G bundle semiconductors increased 17.8% in third quarter and 101.1% year-over-year. The company recently announced commercial availability of two low-cost Android smartphone platforms.

Recently, the company declared a quarterly cash dividend of 10 cents per ADS payable Jan. 24, to holders of record of ordinary shares as of close of business Jan 9. Looking ahead, Spreadtrum expects fourth-quarter 2011 revenue to be in the range of $188 million to $194 million with a gross margin of approximately 41%.

Of the 16 analysts covering the stock, 88% recommend a buy and 12% rate a hold. Analysts polled by Bloomberg foresee the stock gaining an average 61.4% to $31.65 in the upcoming 12 months.

>>To see these stocks in action, visit the 10 Stocks With Highest Profitability Ratios portfolio on Stockpickr.

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