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Solid Cash-Flow Growth Makes These 4 Stocks Worth Buying Now
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Picking profit-making stocks for investments might be a popular choice but not flawless. This is because even a profit-making company can have a deficiency of cash flow and become bankrupt while meeting its obligations. However, one can effectively judge a company’s resilience by looking at its efficiency in generating cash flows.
In this regard, stocks like PDC Energy, Inc. , Louisiana-Pacific Corporation (LPX - Free Report) , Grindrod Shipping Holdings Ltd. (GRIN - Free Report) and BBQ Holdings, Inc. are worth buying.
Cash, which is indeed the lifeblood of any business, gives a company the flexibility to take investment decisions and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and indicates that profits are being channelized in the right direction, indicating a company’s true financial health.
Uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions or the pandemic have all the more reestablished 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, it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in the 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 industry categories.
Here are our four picks out of the 18 stocks that qualified the screening:
PDC Energy, Inc., headquartered in Denver, CO, is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.
The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has moved 2% north to $13.68 over the past week. PDCE currently carries a VGM Score of A.
Louisiana-Pacific Corporation is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction.
The Zacks Consensus Estimate for Louisiana-Pacific’s 2022 earnings has been revised upward to $11.87 per share from $8.54 in the past two months. LPX currently has a VGM Score of A.
Grindrod Shipping is engaged in the ownership and operation of a diversified fleet of owned and long- and short-term chartered-in dry bulk vessels. GRIN is based in Singapore.
The consensus estimate for Grindrod’s ongoing-year earnings has moved nearly 2% north to $5.67 in a month’s time. GRIN currently has a VGM Score of B.
BBQ Holdings, Inc. is a national restaurant company, which is into franchising, ownership and operation of casual and fast dining restaurants.
BBQ Holdings’ expected earnings growth rate for the current year is 66.2%. The Zacks Consensus Estimate for current-year earnings has improved 25.5% over the past month. Currently, BBQ sports a VGM Score of A.
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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Solid Cash-Flow Growth Makes These 4 Stocks Worth Buying Now
Picking profit-making stocks for investments might be a popular choice but not flawless. This is because even a profit-making company can have a deficiency of cash flow and become bankrupt while meeting its obligations. However, one can effectively judge a company’s resilience by looking at its efficiency in generating cash flows.
In this regard, stocks like PDC Energy, Inc. , Louisiana-Pacific Corporation (LPX - Free Report) , Grindrod Shipping Holdings Ltd. (GRIN - Free Report) and BBQ Holdings, Inc. are worth buying.
Cash, which is indeed the lifeblood of any business, gives a company the flexibility to take investment decisions and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and indicates that profits are being channelized in the right direction, indicating a company’s true financial health.
Uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions or the pandemic have all the more reestablished 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, it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in the 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 industry categories.
Here are our four picks out of the 18 stocks that qualified the screening:
PDC Energy, Inc., headquartered in Denver, CO, is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.
The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has moved 2% north to $13.68 over the past week. PDCE currently carries a VGM Score of A.
Louisiana-Pacific Corporation is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction.
The Zacks Consensus Estimate for Louisiana-Pacific’s 2022 earnings has been revised upward to $11.87 per share from $8.54 in the past two months. LPX currently has a VGM Score of A.
Grindrod Shipping is engaged in the ownership and operation of a diversified fleet of owned and long- and short-term chartered-in dry bulk vessels. GRIN is based in Singapore.
The consensus estimate for Grindrod’s ongoing-year earnings has moved nearly 2% north to $5.67 in a month’s time. GRIN currently has a VGM Score of B.
BBQ Holdings, Inc. is a national restaurant company, which is into franchising, ownership and operation of casual and fast dining restaurants.
BBQ Holdings’ expected earnings growth rate for the current year is 66.2%. The Zacks Consensus Estimate for current-year earnings has improved 25.5% over the past month. Currently, BBQ sports a VGM Score of A.
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.