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Look Beyond Earnings: 4 Stocks With Increasing Cash Flows
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We are in one of the busiest weeks of the current-reporting cycle, and betting on stocks based on profit numbers and earnings surprise appears trendy. However, looking beyond the profit numbers and figuring out a company’s efficiency in generating cash flows can be far more rewarding.
This is because even a profit-making company can face cash trouble and end up being bankrupt while meeting its obligations. But a company with solid cash flow can endure any market mayhem besides enjoying flexibility in decision making, chasing potential investments and fueling its growth engine. In fact, even though profit is a company’s goal, cash is its lifeblood for existence and a measure of resiliency.
To find this efficiency, one needs to consider its net cash flow figure. While in any business cash moves in and out, it is net cash flow that explains how much money the company is actually generating.
If a company is experiencing a positive cash flow then it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in business, endure downturns and finally return wealth to shareholders. On the other hand, a negative cash flow indicates a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, having a positive cash flow merely does not secure a company’s future growth. To ride on the growth curve, a company must have its cash flow increasing because that indicates management’s efficiency in regulating its cash movements and less dependency on outside financing for running its business.
Therefore, keep yourself abreast with the following screen to bet on stocks with rising cash flows.
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: No matter whether market conditions are good or bad, 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 four out of six stocks that qualified the screening:
Hitachi, Ltd. (HTHIY - Free Report) , headquartered in Tokyo, is one of the world's leading global electronics companies. They manufacture and market a wide range of products, including computers, semiconductors, consumer products and power and industrial equipment. The company has a VGM Score of A. Hitachi has a projected long-term EPS growth rate of 13%. The Zacks Consensus Estimate for fiscal year 2019 earnings has improved by 7.5% in three months’ time.
Frisco, TX-based Integer Holdings Corporation (ITGR - Free Report) is a medical device outsource manufacturer. The company serves the cardiac, neuromodulation, vascular and portable medical markets. The company has a VGM Score of A. Moreover, the Zacks Consensus Estimate for 2018 grew 3% in the last 30 days.
Panasonic Corp. , headquartered in Japan, is engaged in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. The company has a VGM Score of A. Panasonic has a projected long-term EPS growth rate of 11.3%. The stock has experienced positive estimate revisions, with the Zacks Consensus Estimate for fiscal 2019 earnings moving 1% north in three months’ time.
Lisle, IL-based SunCoke Energy, Inc. (SXC - Free Report) is a producer of metallurgical coke in the Americas. The company has a VGM Score of B. Moreover, the Zacks Consensus Estimate for 2018 earnings increased 20.7% to 35 cents per share in the last 90 days.
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 back testing 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: 4 Stocks With Increasing Cash Flows
We are in one of the busiest weeks of the current-reporting cycle, and betting on stocks based on profit numbers and earnings surprise appears trendy. However, looking beyond the profit numbers and figuring out a company’s efficiency in generating cash flows can be far more rewarding.
This is because even a profit-making company can face cash trouble and end up being bankrupt while meeting its obligations. But a company with solid cash flow can endure any market mayhem besides enjoying flexibility in decision making, chasing potential investments and fueling its growth engine. In fact, even though profit is a company’s goal, cash is its lifeblood for existence and a measure of resiliency.
To find this efficiency, one needs to consider its net cash flow figure. While in any business cash moves in and out, it is net cash flow that explains how much money the company is actually generating.
If a company is experiencing a positive cash flow then it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in business, endure downturns and finally return wealth to shareholders. On the other hand, a negative cash flow indicates a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, having a positive cash flow merely does not secure a company’s future growth. To ride on the growth curve, a company must have its cash flow increasing because that indicates management’s efficiency in regulating its cash movements and less dependency on outside financing for running its business.
Therefore, keep yourself abreast with the following screen to bet on stocks with rising cash flows.
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: No matter whether market conditions are good or bad, 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 four out of six stocks that qualified the screening:
Hitachi, Ltd. (HTHIY - Free Report) , headquartered in Tokyo, is one of the world's leading global electronics companies. They manufacture and market a wide range of products, including computers, semiconductors, consumer products and power and industrial equipment. The company has a VGM Score of A. Hitachi has a projected long-term EPS growth rate of 13%. The Zacks Consensus Estimate for fiscal year 2019 earnings has improved by 7.5% in three months’ time.
Frisco, TX-based Integer Holdings Corporation (ITGR - Free Report) is a medical device outsource manufacturer. The company serves the cardiac, neuromodulation, vascular and portable medical markets. The company has a VGM Score of A. Moreover, the Zacks Consensus Estimate for 2018 grew 3% in the last 30 days.
Panasonic Corp. , headquartered in Japan, is engaged in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. The company has a VGM Score of A. Panasonic has a projected long-term EPS growth rate of 11.3%. The stock has experienced positive estimate revisions, with the Zacks Consensus Estimate for fiscal 2019 earnings moving 1% north in three months’ time.
Lisle, IL-based SunCoke Energy, Inc. (SXC - Free Report) is a producer of metallurgical coke in the Americas. The company has a VGM Score of B. Moreover, the Zacks Consensus Estimate for 2018 earnings increased 20.7% to 35 cents per share in the last 90 days.
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 back testing 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 »