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Bet on These 4 Stocks With Rising Cash Flows to Scoop Big Gains
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Cash is the key to a company’s existence, development and success. It offers the flexibility to make decisions, the means to make investments and the fuel to run its growth engine, thereby, indicating a company’s true financial health.
Investors certainly flock to companies that earn profits, but even a profitable business can succumb to failure if its cash flow is uneven and eventually, file for bankruptcy. However, one can effectively judge a company’s resilience by evaluating its power of generating cash flows, as cash not only guards a company from market mayhem, but also indicates that its profits are being channelized in the right direction.
Particularly, uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns that resulted from the coronavirus pandemic have 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 10 stocks that qualified the screening:
Citi Trends, Inc. (CTRN - Free Report) is a value-priced retailer of urban fashion apparel and accessories for the entire family. The stock currently sports a VGM Score of A. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward to $5.21 from $3.00 in the past 60 days.
Veritiv Corporation engages in offering North American business-to-business distribution solutions. It provides packaging, print and print management, publishing, supply chain, facility and logistics solutions that span the entire lifecycle of core business operations. At present, the stock flaunts a VGM Score of A. The Zacks Consensus Estimate of $4.50 for the current-year earnings has moved 67% north over the past 30 days.
Internet Initiative Japan, Inc. (IIJIY - Free Report) : The company offers a comprehensive range of Internet access and other network services mainly to enterprise customers and also to other Internet service providers in Japan. The stock currently carries a VGM Score of B. The Zacks Consensus Estimate for earnings of the fiscal year ending March 2022 moved 27.8% north from 79 cents to $1.01 in two months’ time.
Townsquare Media Inc. (TSQ - Free Report) operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets. The stock currently sports a VGM Score of A. The Zacks Consensus Estimate for 2021 earnings has moved up 13% over the past 30 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.
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Bet on These 4 Stocks With Rising Cash Flows to Scoop Big Gains
Cash is the key to a company’s existence, development and success. It offers the flexibility to make decisions, the means to make investments and the fuel to run its growth engine, thereby, indicating a company’s true financial health.
Investors certainly flock to companies that earn profits, but even a profitable business can succumb to failure if its cash flow is uneven and eventually, file for bankruptcy. However, one can effectively judge a company’s resilience by evaluating its power of generating cash flows, as cash not only guards a company from market mayhem, but also indicates that its profits are being channelized in the right direction.
Particularly, uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns that resulted from the coronavirus pandemic have 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 10 stocks that qualified the screening:
Citi Trends, Inc. (CTRN - Free Report) is a value-priced retailer of urban fashion apparel and accessories for the entire family. The stock currently sports a VGM Score of A. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward to $5.21 from $3.00 in the past 60 days.
Veritiv Corporation engages in offering North American business-to-business distribution solutions. It provides packaging, print and print management, publishing, supply chain, facility and logistics solutions that span the entire lifecycle of core business operations. At present, the stock flaunts a VGM Score of A. The Zacks Consensus Estimate of $4.50 for the current-year earnings has moved 67% north over the past 30 days.
Internet Initiative Japan, Inc. (IIJIY - Free Report) : The company offers a comprehensive range of Internet access and other network services mainly to enterprise customers and also to other Internet service providers in Japan. The stock currently carries a VGM Score of B. The Zacks Consensus Estimate for earnings of the fiscal year ending March 2022 moved 27.8% north from 79 cents to $1.01 in two months’ time.
Townsquare Media Inc. (TSQ - Free Report) operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets. The stock currently sports a VGM Score of A. The Zacks Consensus Estimate for 2021 earnings has moved up 13% over the past 30 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.