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Look Beyond Profit, Pick These 4 Stocks With Rising Cash Flows
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We are in one of the busiest weeks of the current reporting cycle, and betting on stocks based on profit numbers and earnings surprise is in trend. But looking beyond profits and figuring out a company’s cash position can be far more rewarding.
This is because, even though profit is a company’s goal, cash is necessary for its existence, development and success, and indeed a measure of resiliency. In fact, even a profit-making company can face cash trouble and end up being bankrupt while meeting its obligations. But a company with a solid cash flow can endure any market mayhem besides enjoying flexibility in decision making, chasing potential investments and fueling its growth engine.
In fact, analyzing a company’s cash-generating efficiency has indeed become more relevant 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.
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 15 stocks that qualified the screening:
Publicis Groupe S.A. is a global advertising and communications organization, offering a range of services to companies in 100 countries, with particular strength in France, Germany, the United Kingdom, Spain, Italy and North America.
The Zacks Consensus Estimate for Publicis Groupe’s earnings for the current year has moved 8.3% north in the past month. PUBGY currently has a VGM Score of A.
Jabil, headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
The Zacks Consensus Estimate for Jabil’s earnings for the fiscal year ending August 2023 has moved 2.4% north in the past month. JBL 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 $11.27 per share for AMN Healthcare Services’ current-year earnings has moved marginally north in the past month. AMN has a VGM Score of A.
A-Mark Precious Metals, based in El Segundo, CA, operates as a precious metals trading company.
The Zacks Consensus Estimate for A-Mark Precious Metals’ earnings for the fiscal year ending June 2023 has moved 32.4% north in the past two months. AMRK currently has 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.
Image: Bigstock
Look Beyond Profit, Pick These 4 Stocks With Rising Cash Flows
We are in one of the busiest weeks of the current reporting cycle, and betting on stocks based on profit numbers and earnings surprise is in trend. But looking beyond profits and figuring out a company’s cash position can be far more rewarding.
In this regard, stocks like Publicis Groupe S.A. (PUBGY - Free Report) , Jabil Inc. (JBL - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and A-Mark Precious Metals, Inc. (AMRK - Free Report) are worth buying.
This is because, even though profit is a company’s goal, cash is necessary for its existence, development and success, and indeed a measure of resiliency. In fact, even a profit-making company can face cash trouble and end up being bankrupt while meeting its obligations. But a company with a solid cash flow can endure any market mayhem besides enjoying flexibility in decision making, chasing potential investments and fueling its growth engine.
In fact, analyzing a company’s cash-generating efficiency has indeed become more relevant 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.
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 15 stocks that qualified the screening:
Publicis Groupe S.A. is a global advertising and communications organization, offering a range of services to companies in 100 countries, with particular strength in France, Germany, the United Kingdom, Spain, Italy and North America.
The Zacks Consensus Estimate for Publicis Groupe’s earnings for the current year has moved 8.3% north in the past month. PUBGY currently has a VGM Score of A.
Jabil, headquartered in St. Petersburg, FL, Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
The Zacks Consensus Estimate for Jabil’s earnings for the fiscal year ending August 2023 has moved 2.4% north in the past month. JBL 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 $11.27 per share for AMN Healthcare Services’ current-year earnings has moved marginally north in the past month. AMN has a VGM Score of A.
A-Mark Precious Metals, based in El Segundo, CA, operates as a precious metals trading company.
The Zacks Consensus Estimate for A-Mark Precious Metals’ earnings for the fiscal year ending June 2023 has moved 32.4% north in the past two months. AMRK currently has 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.