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Forget Profit, Bet on These 4 Stocks With Increasing Cash Flows
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The Q4 earnings season is in full swing and investors are now interested in betting on stocks based on profit numbers and surprises. Nevertheless, looking beyond profits and figuring out a company’s ability to generate cash flows can be far more rewarding.
This is because cash indicates a company’s true financial health. It offers the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. In fact, even a company generating profits might face bankruptcy while meeting obligations if it is low on cash flow. However, a sturdy cash balance can cushion companies during any market turbulence.
In this regard, stocks like Modine Manufacturing Company (MOD - Free Report) , Griffon Corporation (GFF - Free Report) , Arch Resources, Inc. (ARCH - Free Report) and GigaCloud Technology Inc. (GCT - Free Report) are worth buying.
Moreover, analyzing a company’s cash-generating efficiency has gained all the more relevance amid uncertainties in the global economy, market disruptions and dislocations, and liquidity concerns.
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 nine stocks that qualified the screening:
Modine Manufacturing operates primarily in a single industry consisting of the manufacturing and selling of heat transfer equipment. These include heat exchangers for cooling all types of engines, transmissions, auxiliary hydraulic equipment, air conditioning components used in cars, trucks, farm and construction machinery and equipment, and heating and cooling equipment for residential and commercial building heating, ventilating, air conditioning and refrigeration equipment.
The Zacks Consensus Estimate for Modine Manufacturing’s fiscal 2024 earnings has moved 7.2% north in the past month to $3.26 per share. MOD has a VGM Score of A.
Griffon Corp, a diversified management and holding company, operates through wholly-owned subsidiaries. It provides consumer and professional, as well as home and building products.
The Zacks Consensus Estimate for Griffon Corp’s fiscal 2024 earnings per share has been revised 2.8% upward to $4.80 in the past week. GFF has a VGM Score of A.
Arch Resources is one of the largest coal producers in the United States, operating nine mines across the major coal basins of the country. The locations of its mines and access to export facilities enable the company to ship coal worldwide.
The Zacks Consensus Estimate for Arch Resources’ 2024 earnings has been revised 12.4% upward to $32.33 per share in the past two months. Currently, ARCH has a VGM Score of A.
GigaCloud is a pioneer of global end-to-end B2B e-commerce solutions for large parcel merchandise. Its platform integrates various aspects of e-commerce, including product discovery, payment processing and logistics, to streamline the buying and selling process for large items.
The Zacks Consensus Estimate for GCT’s 2024 earnings per share has moved up 13.8% over the past two months to $2.23. GigaCloud 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 Increasing Cash Flows
The Q4 earnings season is in full swing and investors are now interested in betting on stocks based on profit numbers and surprises. Nevertheless, looking beyond profits and figuring out a company’s ability to generate cash flows can be far more rewarding.
This is because cash indicates a company’s true financial health. It offers the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. In fact, even a company generating profits might face bankruptcy while meeting obligations if it is low on cash flow. However, a sturdy cash balance can cushion companies during any market turbulence.
In this regard, stocks like Modine Manufacturing Company (MOD - Free Report) , Griffon Corporation (GFF - Free Report) , Arch Resources, Inc. (ARCH - Free Report) and GigaCloud Technology Inc. (GCT - Free Report) are worth buying.
Moreover, analyzing a company’s cash-generating efficiency has gained all the more relevance amid uncertainties in the global economy, market disruptions and dislocations, and liquidity concerns.
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 nine stocks that qualified the screening:
Modine Manufacturing operates primarily in a single industry consisting of the manufacturing and selling of heat transfer equipment. These include heat exchangers for cooling all types of engines, transmissions, auxiliary hydraulic equipment, air conditioning components used in cars, trucks, farm and construction machinery and equipment, and heating and cooling equipment for residential and commercial building heating, ventilating, air conditioning and refrigeration equipment.
The Zacks Consensus Estimate for Modine Manufacturing’s fiscal 2024 earnings has moved 7.2% north in the past month to $3.26 per share. MOD has a VGM Score of A.
Griffon Corp, a diversified management and holding company, operates through wholly-owned subsidiaries. It provides consumer and professional, as well as home and building products.
The Zacks Consensus Estimate for Griffon Corp’s fiscal 2024 earnings per share has been revised 2.8% upward to $4.80 in the past week. GFF has a VGM Score of A.
Arch Resources is one of the largest coal producers in the United States, operating nine mines across the major coal basins of the country. The locations of its mines and access to export facilities enable the company to ship coal worldwide.
The Zacks Consensus Estimate for Arch Resources’ 2024 earnings has been revised 12.4% upward to $32.33 per share in the past two months. Currently, ARCH has a VGM Score of A.
GigaCloud is a pioneer of global end-to-end B2B e-commerce solutions for large parcel merchandise. Its platform integrates various aspects of e-commerce, including product discovery, payment processing and logistics, to streamline the buying and selling process for large items.
The Zacks Consensus Estimate for GCT’s 2024 earnings per share has moved up 13.8% over the past two months to $2.23. GigaCloud 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.