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Scoop Up Big Gains With 4 Stocks Witnessing Rise in Cash Flow

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Parking your hard-earned money in stocks based on top-line growth and profit numbers might be a good option. But choosing stocks based on cash flows can be far more rewarding. This is because cash indicates a company’s true financial health and holds the key to its existence, development and success. This holds more relevance in the current context amid uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions or the pandemic.

In this regard, stocks like Marubeni Corporation (MARUY - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) , Veritiv Corporation and Universal Logistics Holdings, Inc. (ULH - Free Report) are worth buying.

In fact, even a profitable business can succumb to failure if its cash flow is uneven and eventually file for bankruptcy. But a company with solid cash flow can effectively endure any market mayhem and still be on the growth curve because cash offers the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. Moreover, cash indicates that profits are being channelized in the right direction.

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 20 stocks that qualified the screening:

Marubeni Corporation, based in Tokyo, Japan, purchases, distributes and markets various industrial and consumer goods worldwide. It imports, exports and trades within the Japanese market in food, textiles, materials, pulp and paper, chemicals, energy, metals and mineral resources and transportation machinery. It is also engaged in power projects and infrastructure, plants and industrial machinery, real estate development and construction, finance, logistics and information industries.

The Zacks Consensus Estimate for Marubeni’s earnings for the fiscal year ending March 2023 moved 41.7% north in a month. MARUY currently has a VGM Score of A.

AMN Healthcare Services is a travel healthcare staffing company. AMN Healthcare Services recruits and places nurses, physicians, and other healthcare professionals in travel or permanent assignments in acute-care facilities, physician practice groups, and other healthcare facilities.

The Zacks Consensus Estimate of $11.26 per share for AMN Healthcare Services’ current-year earnings has moved 8.2% in the past month. AMN has a VGM Score of A.

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.

The Zacks Consensus Estimate for the current-year earnings has moved up 15.5% to $21.25 in the past month. Currently, VRTV carries a VGM Score of A.

Universal Logistics is a provider of customized transportation and logistics solutions. It offers services across its entire supply chain, including truckload, brokerage, intermodal, dedicated and value-added services.

The Zacks Consensus Estimate of $5.80 for Universal Logistics’ 2022 earnings has moved 27.5% north in the past two months. ULH has a VGM Score of B.

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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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