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4 Stocks With Swelling Cash Flows to Enhance Your Portfolio

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Cash is the lifeblood of a company’s existence, development and success. It gives strength and vitality to a company, the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. Thus, cash indicates a company’s true financial health.

In this regard, stocks like Publicis Groupe S.A. (PUBGY - Free Report) , Encore Wire Corporation (WIRE - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and Hudson Technologies, Inc. (HDSN - Free Report) are worth buying.

Investors 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 flow. This is because cash not only guards a company from market mayhem but also indicates that profits are being channelized in the right direction.

Amid uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions or the pandemic, analyzing a company’s cash-generating efficiency has indeed become all the more relevant.

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 1.9% north in the past month. PUBGY currently has a VGM Score of B.

Encore Wire is a low-cost manufacturer of copper electrical building wire and cable. The company is a significant supplier of residential wire for interior electrical wiring in homes, apartments and manufactured housing, as well as building wire for electrical distribution in commercial and industrial buildings.

The Zacks Consensus Estimate for Encore Wire’s 2022 earnings has been revised 24.2% upward to $33.35 from $26.86 in the past two months. WIRE has a VGM Score of A.

Tecnoglass is a leading manufacturer of architectural glass, windows and associated aluminum products serving the global residential and commercial end markets.

The Zacks Consensus Estimate for Tecnoglass’ 2022 earnings has been revised 19.5% upward to $3.07 in the past month. TGLS has a VGM Score of A.

Hudson Technologies, headquartered in Woodcliff Lake, NJ, is a refrigerant services company. It provides solutions to recurring problems within the refrigeration industry, primarily in the United States.

The Zacks Consensus Estimate of $2.16 per share for Hudson Technologies’ current-year earnings has moved 20.7% north in the past month. HDSN has a VGM Score of A.

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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:

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