If you're looking for a statistic to use in deciding which stocks to buy, consider gross profitability, says Mark Hulbert, editor of Hulbert Financial Digest.

Gross profits equal sales minus cost of goods sold. But why not just focus on net income?

"That is because a company's earnings reflect myriad factors having nothing to do with how profitable it is likely to be in future years, says Robert Novy-Marx, a finance professor at the University of Rochester," Hulbert writes in The Wall Street Journal.

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A growing body of research supports the use of gross profitability to determine which companies will be most profitable in the future, he notes.

"To be sure, that research doesn't suggest that all of the currently most profitable stocks will be at the top of the list in future years," Hulbert writes.

"But, on average, they should be far more profitable than firms currently making the least. And their stocks will have performed better, too."

You can do well by focusing on companies that combine high profitability with low valuations, he explains.

Meanwhile, analysts predict earnings for companies in the Standard & Poor's 500 Index rose only 3.5 percent in the third quarter from a year earlier, according to USA Today.

"As we approach third quarter earnings season, the ratio of negative-to-positive guidance remains elevated, . . . as companies continue to reduce analyst expectations," Adam Parker, managing director at Morgan Stanley, writes in a commentary obtained by the newspaper.

"Estimates have further to fall."

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