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Forget Profit: Bet on 5 Stocks with Increasing Cash Flows
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If profit is a company’s goal then cash is the lifeblood for its existence, development and success. In fact, cash is the most crucial factor for any company and gives it strength and vitality.
Even a profit-making company can face a dearth of cash flow and finally succumb to bankruptcy if its profits are not channelized in the right direction to fund future growth. But a company can effectively tide over any market mayhem if it has healthy cash flow to support. So, look beyond profits and figure out a company’s efficiency in generating cash flows because that reflects the company’s true financial health.
No doubt, cash moves in and out of any business, but it is net cash flow that indicates how much money a company is actually generating. A positive cash flow denotes an increase in the company’s liquid assets, which gives the company the means to settle debt, shell out for its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. On the flip side, a negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, a company can competently grow only when this positive cash flow is rising. This is because increasing cash flow indicates management’s efficiency in generating more cash from its business and less dependence on outside financing.
So, while picking stocks, don’t look at profits only. Make sure to look for stocks with dependable and increasing 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 individual industry categories.
Here are five out of the 10 stocks that qualified the screening:
The Marcus Corporation (MCS - Free Report) , headquartered in Milwaukee, WI, is the owner and operator of movie theatres, hotels and resorts. The company has substantial company-owned real estate assets. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings increased 7.8% over the past 30 days to $1.65. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 15.38%.
Moreover, The Marcus has logged in a return of 72.7% over the past one year, which is way better than the 19.3% gain witnessed by the Zacks categorized Leisure And Recreation Services industry.
PCM, Inc. , based in El Segundo, CA, is a technology solutions provider to businesses, government and educational institutions as well as individual consumers. The company has a VGM score of A. Moreover, it has an expected long-term growth rate of 30.0%.
Also, PCM, Inc. has logged returns of 91.2% over the past one year, which is way better than the 3.4% gain experienced by the Zacks categorized Consumer Products - Discretionary industry.
U.S. Concrete, Inc. , based in Euless, TX, operates as a provider of ready-mixed concrete and concrete-related products and services to the construction industry in the United States. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings has increased 12.5% over the past 30 days to $3.88. Also, over the past six months, U.S. Concrete, Inc.’s shares have outperformed the Zacks categorized Building Products - Concrete And Aggregates industry, registering returns of 22.3% against the industry’s increase of 7.0%.
Autobytel Inc. , headquartered in Irvine, CA, is an internationally branded online automotive commerce company that provides consumers with automotive solutions throughout the lifecycle of vehicle ownership. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings has increased 7.8% over the past 30 days to 97 cents. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 41.98% Also, over the past one month, Autobytel has logged returns of 13.5%, which is ahead of the 7.9% gain witnessed by the Zacks categorized Internet – Commerce industry.
BGC Partners, Inc. , headquartered in London and New York, is a reputed global brokerage company servicing the financial and real estate markets. The company has a VGM Score of B.
The Zacks Consensus Estimate for 2017 earnings increased 5.3% over the past 60 days to $1.00. Moreover, over the past six months, BGC Partners shares have outperformed the Zacks categorized Financial - Investment Bank industry, registering returns of 19.7% against the industry’s increase of 2.1%.
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 backtesting 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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Forget Profit: Bet on 5 Stocks with Increasing Cash Flows
If profit is a company’s goal then cash is the lifeblood for its existence, development and success. In fact, cash is the most crucial factor for any company and gives it strength and vitality.
Even a profit-making company can face a dearth of cash flow and finally succumb to bankruptcy if its profits are not channelized in the right direction to fund future growth. But a company can effectively tide over any market mayhem if it has healthy cash flow to support. So, look beyond profits and figure out a company’s efficiency in generating cash flows because that reflects the company’s true financial health.
No doubt, cash moves in and out of any business, but it is net cash flow that indicates how much money a company is actually generating. A positive cash flow denotes an increase in the company’s liquid assets, which gives the company the means to settle debt, shell out for its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. On the flip side, a negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
However, a company can competently grow only when this positive cash flow is rising. This is because increasing cash flow indicates management’s efficiency in generating more cash from its business and less dependence on outside financing.
So, while picking stocks, don’t look at profits only. Make sure to look for stocks with dependable and increasing 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 individual industry categories.
Here are five out of the 10 stocks that qualified the screening:
The Marcus Corporation (MCS - Free Report) , headquartered in Milwaukee, WI, is the owner and operator of movie theatres, hotels and resorts. The company has substantial company-owned real estate assets. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings increased 7.8% over the past 30 days to $1.65. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 15.38%.
Moreover, The Marcus has logged in a return of 72.7% over the past one year, which is way better than the 19.3% gain witnessed by the Zacks categorized Leisure And Recreation Services industry.
PCM, Inc. , based in El Segundo, CA, is a technology solutions provider to businesses, government and educational institutions as well as individual consumers. The company has a VGM score of A. Moreover, it has an expected long-term growth rate of 30.0%.
Also, PCM, Inc. has logged returns of 91.2% over the past one year, which is way better than the 3.4% gain experienced by the Zacks categorized Consumer Products - Discretionary industry.
U.S. Concrete, Inc. , based in Euless, TX, operates as a provider of ready-mixed concrete and concrete-related products and services to the construction industry in the United States. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings has increased 12.5% over the past 30 days to $3.88. Also, over the past six months, U.S. Concrete, Inc.’s shares have outperformed the Zacks categorized Building Products - Concrete And Aggregates industry, registering returns of 22.3% against the industry’s increase of 7.0%.
Autobytel Inc. , headquartered in Irvine, CA, is an internationally branded online automotive commerce company that provides consumers with automotive solutions throughout the lifecycle of vehicle ownership. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings has increased 7.8% over the past 30 days to 97 cents. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 41.98% Also, over the past one month, Autobytel has logged returns of 13.5%, which is ahead of the 7.9% gain witnessed by the Zacks categorized Internet – Commerce industry.
BGC Partners, Inc. , headquartered in London and New York, is a reputed global brokerage company servicing the financial and real estate markets. The company has a VGM Score of B.
The Zacks Consensus Estimate for 2017 earnings increased 5.3% over the past 60 days to $1.00. Moreover, over the past six months, BGC Partners shares have outperformed the Zacks categorized Financial - Investment Bank industry, registering returns of 19.7% against the industry’s increase of 2.1%.
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 backtesting 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »