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Look Beyond Earnings: 5 Stocks with Increasing Cash Flows
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We are in the busiest week of the current-reporting cycle, and crunching profit numbers and evaluating surprises might seem appropriate right now for investors. But looking beyond the profits and figuring out whether they are being efficiently channeled to the company’s reserves can be a lot more rewarding. This is because a healthy reserve enables a company to fund future growth.
In fact, a profit-making company can have a dearth of cash flow and might go bankrupt while meeting its obligations. Therefore, looking at a company’s ability to produce cash is important in terms of protecting your money in addition to multiplying it.
No doubt, cash moves in and out of any business, but it is net cash flow that indicates how much money a company is actually generating. A positive cash flow denotes an increase in the company’s liquid assets, which gives the company the means to settle debt, shell out for its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. On the flip side, a negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, a company can competently grow only when this positive cash flow is rising, as increasing cash flow indicates management’s efficiency in generating more cash from its business and less dependence on outside financing.
So, while picking stocks this earnings season, don’t look at profits only. Make sure to look for stocks with dependable and increasing cash flows.
Screening Parameters:
To find out stocks that have seen increasing cash flow over time, we ran the screen for those whose cash flow in the latest reported quarter was at least equal to or greater than the 5-year average cash flow per common share. This implies a positive trend and increasing cash over a period of time.
In addition to this, we chose:
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the company’s future performance.
Current Price greater than or equal to $5: This screens out the low priced stocks.
VGM Scoreof B or better: This score is also of great assistance in selecting stocks. Importantly, this scoring system helps in picking winning stocks in their individual industry categories.
Here are five out of seven stocks that made it through the screen:
Apogee Enterprises, Inc. (APOG - Free Report) is a leader in technologies involving the design and development of value-added glass products and services. The company is based in Minneapolis, MN. Presently, Apogee has a VGM score of “B”. Its expected EPS growth rate for 3 to 5 years currently stands at 10.0%.
AMN Healthcare Services Inc. is a San Diego, CA-based company that offers healthcare workforce solutions and staffing services in the U.S. The company has a VGM score of “B”. The company has a decent earnings surprise history, having surpassed estimates in each of the past four quarters, with an average surprise of 23.59%.
Gibraltar Industries, Inc. (ROCK - Free Report) , with a VGM score of “B”, is a leading manufacturer, processor, and distributor of metals and other engineered materials for the building products, vehicular, and other industrial markets. The company is headquartered in Buffalo, NY. With a decent earnings surprise industry, the company remains a solid pick. It exceeded estimates in each of the past four quarters, with an average surprise of 73.45%.
Liberty Interactive Group , with a VGM score of “B”, owns interests in subsidiaries and other companies that are mainly engaged in the video and digital commerce industries. Its expected EPS growth rate for 3 to 5 years currently stands at 20.0%.
Olympus Corporation is a Japan-based company that is engaged in the manufacturing and selling of precision machineries and instruments. The company has a VGM score of “A”.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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Look Beyond Earnings: 5 Stocks with Increasing Cash Flows
We are in the busiest week of the current-reporting cycle, and crunching profit numbers and evaluating surprises might seem appropriate right now for investors. But looking beyond the profits and figuring out whether they are being efficiently channeled to the company’s reserves can be a lot more rewarding. This is because a healthy reserve enables a company to fund future growth.
In fact, a profit-making company can have a dearth of cash flow and might go bankrupt while meeting its obligations. Therefore, looking at a company’s ability to produce cash is important in terms of protecting your money in addition to multiplying it.
No doubt, cash moves in and out of any business, but it is net cash flow that indicates how much money a company is actually generating. A positive cash flow denotes an increase in the company’s liquid assets, which gives the company the means to settle debt, shell out for its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. On the flip side, a negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, a company can competently grow only when this positive cash flow is rising, as increasing cash flow indicates management’s efficiency in generating more cash from its business and less dependence on outside financing.
So, while picking stocks this earnings season, don’t look at profits only. Make sure to look for stocks with dependable and increasing cash flows.
Screening Parameters:
To find out stocks that have seen increasing cash flow over time, we ran the screen for those whose cash flow in the latest reported quarter was at least equal to or greater than the 5-year average cash flow per common share. This implies a positive trend and increasing cash over a period of time.
In addition to this, we chose:
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the company’s future performance.
Current Price greater than or equal to $5: This screens out the low priced stocks.
VGM Score of B or better: This score is also of great assistance in selecting stocks. Importantly, this scoring system helps in picking winning stocks in their individual industry categories.
Here are five out of seven stocks that made it through the screen:
Apogee Enterprises, Inc. (APOG - Free Report) is a leader in technologies involving the design and development of value-added glass products and services. The company is based in Minneapolis, MN. Presently, Apogee has a VGM score of “B”. Its expected EPS growth rate for 3 to 5 years currently stands at 10.0%.
AMN Healthcare Services Inc. is a San Diego, CA-based company that offers healthcare workforce solutions and staffing services in the U.S. The company has a VGM score of “B”. The company has a decent earnings surprise history, having surpassed estimates in each of the past four quarters, with an average surprise of 23.59%.
Gibraltar Industries, Inc. (ROCK - Free Report) , with a VGM score of “B”, is a leading manufacturer, processor, and distributor of metals and other engineered materials for the building products, vehicular, and other industrial markets. The company is headquartered in Buffalo, NY. With a decent earnings surprise industry, the company remains a solid pick. It exceeded estimates in each of the past four quarters, with an average surprise of 73.45%.
Liberty Interactive Group , with a VGM score of “B”, owns interests in subsidiaries and other companies that are mainly engaged in the video and digital commerce industries. Its expected EPS growth rate for 3 to 5 years currently stands at 20.0%.
Olympus Corporation is a Japan-based company that is engaged in the manufacturing and selling of precision machineries and instruments. The company has a VGM score of “A”.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »