We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Forget Profit, Bet on These 4 Stocks With Rising Cash Flows
Read MoreHide Full Article
It might seem appropriate to lay a wager on stocks based on profit numbers and earnings surprises in this stretch of the current reporting cycle. However, betting on stocks with a healthy cash level can be far more rewarding because although profit is a company’s goal, cash is its lifeblood and a measure of resiliency. This has become all the more important amid uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns.
Even a profit-making company can face a dearth of cash flow if its profits are not channeled in the right direction and end up filing for bankruptcy. However, a company with a healthy cash level not only enjoys the flexibility to make decisions, chase potential investments and run its growth engine but also weathers any market mayhem.
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 13 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 6.1% north in the past month. PUBGY currently has a VGM Score of B.
M/I Homes is one of the nation's leading builders of single-family homes. The company designs, markets, constructs and sells single-family homes and attached townhomes to first-time, move-up, empty-nester and luxury buyers.
The Zacks Consensus Estimate for M/I Homes’ current-year earnings has moved up 34.2% over the past week to $16.88 per share. MHO has a VGM Score of A.
InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company is engaged in designing and developing a wide range of advanced technology solutions, which are used in digital cellular, and wireless 3G, 4G and IEEE 802-related products and networks.
The Zacks Consensus Estimate for the company’s 2023 earnings per share has marginally improved to $8.08 from $8.07 over the past two months. IDCC has a VGM Score of B.
Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil, the North Latin America division, South Latin America and the Caribbean division. It also runs quick-service restaurants in Latin America and the Caribbean.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 earnings per share has been revised 5.6% upward to 76 cents in the past month. ARCO has a VGM Score of B.
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
Forget Profit, Bet on These 4 Stocks With Rising Cash Flows
It might seem appropriate to lay a wager on stocks based on profit numbers and earnings surprises in this stretch of the current reporting cycle. However, betting on stocks with a healthy cash level can be far more rewarding because although profit is a company’s goal, cash is its lifeblood and a measure of resiliency. This has become all the more important amid uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns.
In this regard, stocks like Publicis Groupe S.A. (PUBGY - Free Report) , M/I Homes, Inc. (MHO - Free Report) , InterDigital, Inc. (IDCC - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) are worth buying.
Even a profit-making company can face a dearth of cash flow if its profits are not channeled in the right direction and end up filing for bankruptcy. However, a company with a healthy cash level not only enjoys the flexibility to make decisions, chase potential investments and run its growth engine but also weathers any market mayhem.
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 13 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 6.1% north in the past month. PUBGY currently has a VGM Score of B.
M/I Homes is one of the nation's leading builders of single-family homes. The company designs, markets, constructs and sells single-family homes and attached townhomes to first-time, move-up, empty-nester and luxury buyers.
The Zacks Consensus Estimate for M/I Homes’ current-year earnings has moved up 34.2% over the past week to $16.88 per share. MHO has a VGM Score of A.
InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company is engaged in designing and developing a wide range of advanced technology solutions, which are used in digital cellular, and wireless 3G, 4G and IEEE 802-related products and networks.
The Zacks Consensus Estimate for the company’s 2023 earnings per share has marginally improved to $8.08 from $8.07 over the past two months. IDCC has a VGM Score of B.
Arcos Dorados operates as a franchisee of McDonald's, with its operations divided in Brazil, the North Latin America division, South Latin America and the Caribbean division. It also runs quick-service restaurants in Latin America and the Caribbean.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 earnings per share has been revised 5.6% upward to 76 cents in the past month. ARCO has a VGM Score of B.
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.