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Forget Profit, Bet on 5 Stocks with Rising Cash Flow
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For investors, it is easier to pick stocks on the basis of profit numbers and surprises for big gains. However, the assessment of the cash position indicates the true financial health of a company.
In fact, even a profit making company can have a low cash flow and go bankrupt while meeting its obligations if its profits are not channelized in the right direction. However, a company can effectively weather market downturns if it has a solid cash position.
A strong cash balance lends a company the flexibility to make decisions, the means to invest and the fuel to run its growth engine. It is indeed the key for a company’s existence, development and success.
Cash flows in and out, but net cash flow indicates the actual amount of money a company is generating. Positive cash flow indicates enhanced liquidity, giving the company more means for debt repayment, meeting expenses, paying dividends, buying back stocks and reinvesting in its business. On the other hand, a negative cash flow implies that a company’s liquid assets are decreasing, resulting in reduced flexibility to support other such moves.
However, positive cash flow alone is not adequate to predict a company’s future performance. If the cash flow is increasing over time, it indicates that a company’s competency is growing because rising cash flow implies management’s efficiency in regulating cash movements, depending less on outside financing, and improving fundamentals.
Keeping these factors in mind, for the approaching Q1 earnings season, we would like you to consider stocks that have been seeing rising cash flow.
Screening Parameters:
To find 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.
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 sieves out 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 the nine stocks that qualified the screening:
Aegean Marine Petroleum Network Inc. , based in Athens, Greece, is a marine fuel logistics company that physically supplies and markets refined marine fuel and lubricants to ships in port and at sea. The company has a VGM Score of ‘A’.
The Zacks Consensus Estimate for 2017 earnings increased 6.5% over the past 30 days. Moreover, over the past one year, Aegean Marine Petroleum’s shares outperformed the Zacks categorized Transportation - Shipping industry, registering a return of 54.7% against the industry’s decline of 3.1%.
Lundin Mining Corporation (LUNMF - Free Report) , headquartered in Toronto, Canada, is a rapidly growing, diversified base metals mining company with operations in Chile, the USA, Portugal, and Sweden, mainly producing copper, nickel and zinc. The company has a VGM Score of ‘A’. Moreover, it has an expected long-term growth rate of 34.1%.
Lundin Mining registered a return of 78.1% over the past one year, way better than the 14.8% gain of the Zacks categorized Mining - Non Ferrous industry.
SP Plus Corporation (SP - Free Report) , based in Chicago, provides professional parking, ground transportation, facility maintenance, security and event logistics services to property owners and managers in all markets of the real estate industry. The company has a VGM score of ‘B’. Moreover, it has an expected long-term growth rate of 11.5%.
Also, SP Plus logged a return of 43.6% over the past one year, which is way better than the 15.0% loss incurred by the Zacks categorized Consumer Services - Miscellaneous industry.
SK Telecom Co., Ltd. (SKM - Free Report) is a provider of wireless telecommunications services in South Korea. The company offers wireless voice transmission services, cellular global roaming services, and interconnection services to connect its networks to fixed-line and other wireless networks. The stock has a VGM score of ‘B’.
The Zacks Consensus Estimate for 2017 earnings increased 4.2% over the past 60 days. Also, over the past one year, SK Telecom’s shares outperformed the Zacks categorized Wireless Non-US industry, registering a return of 25.6% against the industry’s decline of 1.7%.
j2 Global, Inc. , headquartered in Los Angeles, offers Internet services through its segments – Business Cloud Services and Digital Media. The stock has a VGM Score of ‘B’. The company delivered an average positive earnings surprise of 2.46% in the trailing four quarters.
Moreover, 2017 earnings estimates increased 8.1% to $5.59 per share over the last 60 days. Also, j2 Global gained 38.1% in the last one year while the Zacks categorized Internet Software industry increased 9.4%.
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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Forget Profit, Bet on 5 Stocks with Rising Cash Flow
For investors, it is easier to pick stocks on the basis of profit numbers and surprises for big gains. However, the assessment of the cash position indicates the true financial health of a company.
In fact, even a profit making company can have a low cash flow and go bankrupt while meeting its obligations if its profits are not channelized in the right direction. However, a company can effectively weather market downturns if it has a solid cash position.
A strong cash balance lends a company the flexibility to make decisions, the means to invest and the fuel to run its growth engine. It is indeed the key for a company’s existence, development and success.
Cash flows in and out, but net cash flow indicates the actual amount of money a company is generating. Positive cash flow indicates enhanced liquidity, giving the company more means for debt repayment, meeting expenses, paying dividends, buying back stocks and reinvesting in its business. On the other hand, a negative cash flow implies that a company’s liquid assets are decreasing, resulting in reduced flexibility to support other such moves.
However, positive cash flow alone is not adequate to predict a company’s future performance. If the cash flow is increasing over time, it indicates that a company’s competency is growing because rising cash flow implies management’s efficiency in regulating cash movements, depending less on outside financing, and improving fundamentals.
Keeping these factors in mind, for the approaching Q1 earnings season, we would like you to consider stocks that have been seeing rising cash flow.
Screening Parameters:
To find 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: Irrespective of market conditions, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 sieves out 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 the nine stocks that qualified the screening:
Aegean Marine Petroleum Network Inc. , based in Athens, Greece, is a marine fuel logistics company that physically supplies and markets refined marine fuel and lubricants to ships in port and at sea. The company has a VGM Score of ‘A’.
The Zacks Consensus Estimate for 2017 earnings increased 6.5% over the past 30 days. Moreover, over the past one year, Aegean Marine Petroleum’s shares outperformed the Zacks categorized Transportation - Shipping industry, registering a return of 54.7% against the industry’s decline of 3.1%.
Lundin Mining Corporation (LUNMF - Free Report) , headquartered in Toronto, Canada, is a rapidly growing, diversified base metals mining company with operations in Chile, the USA, Portugal, and Sweden, mainly producing copper, nickel and zinc. The company has a VGM Score of ‘A’. Moreover, it has an expected long-term growth rate of 34.1%.
Lundin Mining registered a return of 78.1% over the past one year, way better than the 14.8% gain of the Zacks categorized Mining - Non Ferrous industry.
SP Plus Corporation (SP - Free Report) , based in Chicago, provides professional parking, ground transportation, facility maintenance, security and event logistics services to property owners and managers in all markets of the real estate industry. The company has a VGM score of ‘B’. Moreover, it has an expected long-term growth rate of 11.5%.
Also, SP Plus logged a return of 43.6% over the past one year, which is way better than the 15.0% loss incurred by the Zacks categorized Consumer Services - Miscellaneous industry.
SK Telecom Co., Ltd. (SKM - Free Report) is a provider of wireless telecommunications services in South Korea. The company offers wireless voice transmission services, cellular global roaming services, and interconnection services to connect its networks to fixed-line and other wireless networks. The stock has a VGM score of ‘B’.
The Zacks Consensus Estimate for 2017 earnings increased 4.2% over the past 60 days. Also, over the past one year, SK Telecom’s shares outperformed the Zacks categorized Wireless Non-US industry, registering a return of 25.6% against the industry’s decline of 1.7%.
j2 Global, Inc. , headquartered in Los Angeles, offers Internet services through its segments – Business Cloud Services and Digital Media. The stock has a VGM Score of ‘B’. The company delivered an average positive earnings surprise of 2.46% in the trailing four quarters.
Moreover, 2017 earnings estimates increased 8.1% to $5.59 per share over the last 60 days. Also, j2 Global gained 38.1% in the last one year while the Zacks categorized Internet Software industry increased 9.4%.
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 »