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Forget Profit, Bet on 4 Stocks With Increasing Cash Flows
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Crunching profit numbers and evaluating surprises might be the preferred methods for scooping up big gains in the Q1 earnings season. However, looking beyond profits and assessing a company’s cash position can be far more rewarding because these indicate its true financial health.
In this regard, stocks like H&E Equipment Services, Inc. (HEES - Free Report) , HNI Corporation (HNI - Free Report) , GigaCloud Technology Inc. (GCT - Free Report) and Betterware de México S.A.P.I. de C.V. (BWMX - Free Report) are worth buying.
This is because although profit is a company’s goal, cash is the lifeblood of its existence, development and success, and indeed a measure of its resilience. In fact, even a profitable business can fail if its cash flow is uneven and eventually file for bankruptcy. Nevertheless, a company with a healthy cash position can effectively tide over any market mayhem and still be on its growth curve, besides enjoying the flexibility to make decisions, chase potential investments and run its growth engine.
Furthermore, with uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions, analyzing a company’s cash-generating efficiency holds more relevance in the current context.
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 11 stocks that qualified the screening:
H&E Equipment Services is one of the largest integrated equipment services companies in the United States. The company is focused on heavy construction and industrial equipment, as well as rents, sells and provides parts and service support to the four core categories of specialized equipment. These are hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.
The Zacks Consensus Estimate for H&E Equipment Services’ current-year earnings has been revised upward by 3.1% in the past two months to $5.02 per share. HEES currently has a VGM Score of A.
HNI Corp. provides products and solutions for home and workplace environments. HNI is a leading global provider and designer of office furniture, and the leading manufacturer and marketer of hearth products.
The Zacks Consensus Estimate for HNI Corp.’s 2024 earnings per share has been revised 6.5% upward to $2.93 in the past two months. HNI has a VGM Score of B.
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 15.7% over the past month to $2.58. GigaCloud has a VGM Score of B.
Betterware de México, S.A.P.I. de C.V. is a direct-to-consumer selling company principally in Mexico. It is primarily focused on the home organization and solutions segment. BWMX’s product portfolio includes home organization, kitchen preparation, food containers, smart furniture, technology and mobility, as well as other minor categories.
The Zacks Consensus Estimate for its current-year earnings has improved 26.3% over the past two months to $2.02. BWMX 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.
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Forget Profit, Bet on 4 Stocks With Increasing Cash Flows
Crunching profit numbers and evaluating surprises might be the preferred methods for scooping up big gains in the Q1 earnings season. However, looking beyond profits and assessing a company’s cash position can be far more rewarding because these indicate its true financial health.
In this regard, stocks like H&E Equipment Services, Inc. (HEES - Free Report) , HNI Corporation (HNI - Free Report) , GigaCloud Technology Inc. (GCT - Free Report) and Betterware de México S.A.P.I. de C.V. (BWMX - Free Report) are worth buying.
This is because although profit is a company’s goal, cash is the lifeblood of its existence, development and success, and indeed a measure of its resilience. In fact, even a profitable business can fail if its cash flow is uneven and eventually file for bankruptcy. Nevertheless, a company with a healthy cash position can effectively tide over any market mayhem and still be on its growth curve, besides enjoying the flexibility to make decisions, chase potential investments and run its growth engine.
Furthermore, with uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions, analyzing a company’s cash-generating efficiency holds more relevance in the current context.
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 11 stocks that qualified the screening:
H&E Equipment Services is one of the largest integrated equipment services companies in the United States. The company is focused on heavy construction and industrial equipment, as well as rents, sells and provides parts and service support to the four core categories of specialized equipment. These are hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.
The Zacks Consensus Estimate for H&E Equipment Services’ current-year earnings has been revised upward by 3.1% in the past two months to $5.02 per share. HEES currently has a VGM Score of A.
HNI Corp. provides products and solutions for home and workplace environments. HNI is a leading global provider and designer of office furniture, and the leading manufacturer and marketer of hearth products.
The Zacks Consensus Estimate for HNI Corp.’s 2024 earnings per share has been revised 6.5% upward to $2.93 in the past two months. HNI has a VGM Score of B.
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 15.7% over the past month to $2.58. GigaCloud has a VGM Score of B.
Betterware de México, S.A.P.I. de C.V. is a direct-to-consumer selling company principally in Mexico. It is primarily focused on the home organization and solutions segment. BWMX’s product portfolio includes home organization, kitchen preparation, food containers, smart furniture, technology and mobility, as well as other minor categories.
The Zacks Consensus Estimate for its current-year earnings has improved 26.3% over the past two months to $2.02. BWMX 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.