Quality companies with strong returns are getting harder to find, according to Citi Research. Return on equity, considered to be a profitability metric calculated by dividing a company’s net income by shareholders’ equity, is “increasingly scarce” among big-name stocks now, Citi U.S. equity strategist Scott Chronert wrote in a recent note to clients. “Stocks where ROE is expected to improve due to margin expansion and/or total asset turnover gains are becoming less abundant in the S & P 500. This is largely a function of downgraded outlooks on softer macros and trade concerns,” Chronert said. Fewer companies in the broad-market index made the cut in Citi’s latest rebalance of its “Positive ROE Trend” stock basket, which includes names that Chronert said have expectations for ROE gains driven by margin expansion and/or better efficiency measured by total asset turnover. Only 90 names are included in the latest rebalance this quarter, while more than 100 names made the basket in prior rebalances. “The outperformance of our Positive ROE Trend baskets versus Negative has largely persisted through the broader market drawdown and recovery … Despite widening performance spreads, Positive ROE Trend baskets continue to trade at justifiable valuations,” Chronert said. Take a look at a few of the names with the highest ROE that made Citi’s screen. According to Citi, defense company Lockheed Martin is set to have the highest ROE next year among names in the S & P 500. Lockheed Martin has an ROE of 9.6% and should boast an ROE of 93.90% by the end of 2026, the firm’s estimates show. The company last month reaffirmed its forecasts for the year given resilient demand for its missile systems and fighter jets. Lockheed Martin Chief Operating Officer Frank St. John told CNBC on Monday that the company is seeing increased defense spending from European countries and the U.S. “We are probably in the beginning of a three-to-five year surge in defense spending,” John said. Retail giants Tapestry and Ralph Lauren boast strong ROE for next year of 61.4% and 31.9%, respectively, per Citi. Tapestry — which owns brands Coach, Kate Spade New York, and Stuart Weitzman — has recently become a favorite among some Wall Street analysts. Tapestry shares are up nearly 28% this year and jumped more than 5% on Monday alone after JPMorgan reiterated its overweight outlook on the stock, pointing to the multiyear growth outlook for the company’s luxury brand Coach. TD Cowen upgraded the stock last week to buy from hold. Netflix , Broadcom and Chipotle Mexican Grill are other stocks investors can count on to deliver strong profits ahead, according to the screener. Broadcom and Chipotle each boast a projected ROE of more than 43% by the end of 2026 — a significant jump from their current ROEs. Broadcom shares have rallied roughly 51% this quarter and are up 9% year to date. The chipmaker’s CEO has said that Broadcom expects its fiscal 2025 growth rate for AI revenue to “sustain into fiscal 2026” as demand for its custom artificial intelligence chips and networking solutions remain strong.