Citi named Cboe Global Markets and First Solar as stocks to watch, pointing to a focus on companies with strong profitability. The call places both firms in a group tied to improving return on equity, a metric closely watched by investors seeking durable gains. The move comes as markets weigh earnings quality and pricing power amid shifting rates and demand.
“Citi highlighted Cboe Global Markets and First Solar as stocks within its positive return on equity trend basket.”
The signal matters because return on equity, or ROE, measures how efficiently a company turns shareholder capital into profits. Higher and rising ROE often reflects stronger business models, disciplined costs, or steady pricing. Banks and asset managers often build themed lists, or “baskets,” to track such trends and guide clients on strategy.
Why ROE Is Back in Focus
ROE has gained fresh attention during a period of uneven growth and changing borrowing costs. When capital is more expensive, firms with efficient balance sheets and healthy margins can stand out. Investors also use ROE to compare peers within an industry and to screen for potential value traps.
Analysts caution that ROE can be flattered by leverage or one-off gains. The most useful signals come from steady, repeatable earnings and prudent capital use. In that context, Citi’s emphasis on a “positive” ROE trend points to names showing improvement over time rather than single-quarter spikes.
The Picks: Cboe Global Markets and First Solar
Cboe Global Markets operates exchanges for options, equities, and futures. Its franchise in options and volatility-linked products gives it a diversified fee base and pricing power tied to trading activity. When market swings rise, volumes can climb, lifting revenue.
First Solar manufactures thin-film solar modules. The company’s technology aims at utility-scale projects, where efficiency, durability, and supply certainty are critical. Supportive policies and corporate decarbonization targets have sustained demand for large solar installations, though pricing and supply chains still matter.
Both companies have distinct drivers. Cboe’s results hinge on trading volumes, new product adoption, and market structure. First Solar’s outlook depends on project pipelines, costs, and the pace of clean energy spending. Citi’s basket placement suggests each is showing improving efficiency or profitability trends relative to shareholder equity.
What the Selection Signals for Investors
Grouping these two companies signals a broader theme: profitability quality cutting across sectors. It is not only industrials or banks that can show rising ROE. Exchanges with scale and clean energy firms with cost control can, too.
- Rising ROE can indicate pricing power or operating leverage.
- Quality screens often reduce downside in choppy markets.
- Sector-neutral baskets can help avoid concentrated bets.
For Cboe, watch monthly volume updates, new listings, and cross-border growth. For First Solar, monitor manufacturing yields, input costs, and utility project timelines. Both sets of factors feed directly into earnings and equity returns.
Risks and Counterpoints
There are risks to any ROE-based strategy. Financial engineering can lift ROE without improving cash flow. A slowdown in trading activity could weigh on Cboe. Project delays or module price competition could pressure First Solar.
Some portfolio managers prefer free cash flow and return on invested capital over ROE for a cleaner view of performance. Blending multiple quality metrics can offset blind spots.
What to Watch Next
Upcoming earnings and guidance will test the thesis behind these selections. Investors will look for sustained margin strength, disciplined spending, and stable demand. Policy developments, from market structure rules to energy incentives, could also influence both names.
Citi’s signal places Cboe Global Markets and First Solar in a profitability trend that investors are tracking closely. The focus on ROE reflects a return to fundamentals after a lengthy period shaped by liquidity and rate moves. The next leg depends on execution, not just screens.
