For Immediate Release
Chicago, IL – October 12, 2021 – Stocks in this week’s article are Hibbett, Inc. (HIBB), Encompass Health Corp. (
EHC Quick Quote EHC - Free Report) , Berry Global Group, Inc. ( BERY Quick Quote BERY - Free Report) , Vishay Intertechnology, Inc. ( VSH Quick Quote VSH - Free Report) and Affiliated Managers Group, Inc. ( AMG Quick Quote AMG - Free Report) . Pick These 5 Low P/CF Stocks for a Value-Based Portfolio
Value style is considered one of the best practices when it comes to picking stocks. Value investing is essentially about selecting stocks that are fundamentally sound but have been beaten down by some external factors, such as the pandemic. Such stocks are poised to bounce back as and when investors recognize the inherent value of companies. Certainly, value investment strategy suits best to investors having long-term horizon.
There are different valuation metrics to determine a stock’s inherent strength but a random selection of a ratio cannot serve your purpose if you want a realistic assessment of a company’s financial position. For this, we would suggest
Price to Cash Flow (or P/CF) ratio as one of the key metrics.
This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per-share basis – the lower the number, the better. One of the important factors that make P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing the financial health of a company.
Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. However, cash flow is reliable. It is net cash flow that unveils how much money a company is actually generating and how effectively management is deploying the same.
Positive cash flow indicates an increase in a company’s liquid assets. It 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. Negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and also consider price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a
of A or B to your search criteria should lead to even better results as these eliminate the chance of falling into a value trap. Value Score For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1809435/pick-these-5-low-pcf-stocks-for-a-value-based-portfolio?art_rec=blog-analyst_blog-up_next-ID01-txt-1809435 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. About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
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Contact: Jim Giaquinto
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