High Margin US Businesses — Operating Margin Above 20% with Strong ROCE on NYSE & NASDAQ

About This Screen

Operating margin — the percentage of revenue that survives after paying for all operating costs — is one of the most revealing indicators of business quality available in financial statements. A company with an operating margin above 20% is keeping more than 20 cents of every revenue dollar as operating profit after manufacturing costs, research and development, sales expenses, and administrative overhead. This level of profitability is rarely accidental: it almost always reflects some form of durable competitive advantage — a dominant brand that commands premium pricing, proprietary technology that competitors cannot replicate, or a network effect that makes switching prohibitively costly for customers. Companies sustaining these margins over years are businesses with genuine moats.

This screen applies two core quality filters simultaneously. Operating margin must exceed 20%, filtering the universe down to genuinely high-profitability businesses. ROCE (Return on Capital Employed) must exceed 15%, ensuring that the high margins translate into genuine capital efficiency rather than being absorbed by heavy asset bases or working capital requirements. A company can have high gross margins but low ROCE if it requires massive capital investment in equipment, inventory, or receivables to generate each dollar of revenue. The combination of high operating margin and high ROCE identifies the asset-light, capital-efficient businesses that are the gold standard of quality investing.

The sectors most commonly represented in this screen include enterprise software, digital advertising platforms, specialty pharmaceuticals, consumer staples brands, financial exchanges and payment networks, and professional services firms. These businesses share a common characteristic: their primary assets are intellectual property, brand equity, customer relationships, and proprietary data — none of which appear at full value on a balance sheet, which is why ROCE calculated on accounting book value can look extraordinarily high even when the true competitive position is rationally valued by the market. This screen finds that intersection.

When evaluating names from this screen, the most important additional analysis is examining the consistency and trajectory of operating margin over three to five years. A margin that has been consistently above 20% through different economic cycles is far more valuable than one that recently spiked due to temporarily depressed costs or a one-time revenue event. Look for companies where margins are stable or expanding alongside revenue growth — this combination signals operational leverage and genuine pricing power. The ROCE column helps distinguish capital-efficient high-margin businesses from capital-intensive ones where the margin is partially offset by heavy asset requirements. Refreshes daily.