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4 High-Flying Stocks to Bet On With Increasing Cash Flows

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Cash is the lifeblood of any business. It offers the flexibility to make decisions, the means to make potential investments and fuel to run its growth engine. In fact, it holds the key to a company’s existence, development and success.

In fact, even a company generating profits might face bankruptcy, while meeting obligations if it is low on cash flow. However, a company with sturdy cash balance can effectively tide over any market mayhem. It also indicates that profits are being channelized in the right direction.

Particularly, the uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns that resulted from the coronavirus pandemic has all the more established the relevance of analyzing a company’s cash-generating efficiency.

To figure out this efficiency, one needs to consider a company’s net cash flow. While in any business cash moves in and out, it is net cash flow that explains how much money a 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 the four out of the 11 stocks that qualified the screening:

Matson Inc. (MATX - Free Report) provides ocean transportation and logistics services. It offers shipping services in Hawaii, Guam, and Micronesia islands, and expedited service from China to Southern California. At present, the stock has a VGM Score of A. The Zacks Consensus Estimate of $3.77 for 2020 earnings has been revised 1.3% upward over the past week.

Mueller Industries Inc. (MLI - Free Report) manufactures and sells copper, brass, aluminum, and plastic products in North America, Europe, Asia, and the Middle East. Currently, the stock has a VGM Score of A. The company has an expected earnings growth rate of 17% for the current year. The Zacks Consensus Estimate for this year has improved more than 100% over the last 30 days.

Hillenbrand Inc. (HI - Free Report) is a global diversified company, with its portfolio comprising industrial businesses like Coperion, Milacron Injection Molding & Extrusion, and Mold-Masters, along with Batesville, a recognized leader in the death care industry in North America. The stock currently has a VGM Score of B. The Zacks Consensus Estimate of $3.17 for fiscal 2021 earnings moved 1.3% upward over the past month.

Sony Corporation : Headquartered in Tokyo, Japan, Sony is a multi-national conglomerate that designs, manufactures, and sells several consumer and industrial electronic equipment. With its presence in the music and image-based software markets globally, the company is active in production, acquisition and distribution of motion pictures as well as television programming, along with the operation of television and digital networks. The stock currently carries a VGM Score of B. It has a long-term earnings growth expectation of 7.9%. The Zacks Consensus Estimate of $6.38 for the fiscal year ending Mar 31, 2021, moved marginally upward over the past week.

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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.


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