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Look Beyond Earnings: Bet on 4 Stocks With Rising Cash Flows
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Key Takeaways
Four stocks with increasing cash flow trends passed Zacks' screening criteria.
Sumitomo, Mission Produce, Flexsteel and FreightCar America all show earnings estimate upgrades.
Each company holds a VGM Score of A or B, signaling strong potential within its industry groups.
Investors can be lured by profits and earnings surprises in the ongoing reporting cycle. However, during this earnings season and beyond, betting on stocks with a healthy cash level can be far more rewarding because cash is the lifeblood of a company’s existence, a measure of resiliency and a revelation of its true financial health.
Even after reaping profits, a company can face a dearth of cash flow and be bankrupt while meeting its obligations if its profits are not channeled in the right direction. However, a company with adequate cash flows can effectively tide over any market mayhem while enjoying flexibility in decision-making and chasing potential investments.
Analyzing a company’s cash-generating efficiency has indeed become more relevant amid uncertainties in the global economy, market disruptions and dislocations. Studying a company’s ability to produce cash is important not only for protecting your money but also for multiplying it.
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 four stocks that qualified the screening:
Sumitomo Corporation, headquartered in Tokyo, Japan, is engaged in multifaceted business activities. It operates as an integrated trading company worldwide. The company sells a variety of domestic products and services, and conducts import, export and trilateral business transactions. It also provides domestic and international business investment and participates in numerous other activities across various industrial sectors worldwide.
The Zacks Consensus Estimate for fiscal 2026 earnings per share has improved 4.1% over the past month. SSUMY has a VGM Score of B.
Mission Produce sources, produces, packs, distributes and markets avocados principally in the United States and internationally. The company serves retail, wholesale and foodservice customers.
The Zacks Consensus Estimate for Mission Produce’s fiscal 2025 earnings has been revised upward by 13.6% to 67 cents per share over the past two months. AVO has a VGM Score of B.
Flexsteel Industries designs, manufactures, imports and markets residential furniture products in the United States. The company distributes its products across the nation through its e-commerce channel as well as a direct sales force.
Estimates for Flexsteel’s fiscal 2026 earnings have increased 5.5% to $3.85 over the past two months, depicting analysts’ optimism about the company’s prospects. Also, FLXS has a VGM Score of A.
FreightCar America designs, manufactures and supplies railroad freight cars, along with railcar parts and components. The company also provides railcar repair services, full railcar rebody solutions and railcar conversion projects that return idle rail assets to active, revenue-generating use.
The Zacks Consensus Estimate for FreightCar America’s current-year earnings has moved 14.9% north over the past three months to 54 cents per share. RAIL currently has a VGM Score of A.
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
Look Beyond Earnings: Bet on 4 Stocks With Rising Cash Flows
Key Takeaways
Investors can be lured by profits and earnings surprises in the ongoing reporting cycle. However, during this earnings season and beyond, betting on stocks with a healthy cash level can be far more rewarding because cash is the lifeblood of a company’s existence, a measure of resiliency and a revelation of its true financial health.
In this regard, stocks such as Sumitomo Corporation (SSUMY - Free Report) , Mission Produce, Inc. (AVO - Free Report) , Flexsteel Industries, Inc. (FLXS - Free Report) and FreightCar America, Inc. (RAIL - Free Report) are worth buying.
Even after reaping profits, a company can face a dearth of cash flow and be bankrupt while meeting its obligations if its profits are not channeled in the right direction. However, a company with adequate cash flows can effectively tide over any market mayhem while enjoying flexibility in decision-making and chasing potential investments.
Analyzing a company’s cash-generating efficiency has indeed become more relevant amid uncertainties in the global economy, market disruptions and dislocations. Studying a company’s ability to produce cash is important not only for protecting your money but also for multiplying it.
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 four stocks that qualified the screening:
Sumitomo Corporation, headquartered in Tokyo, Japan, is engaged in multifaceted business activities. It operates as an integrated trading company worldwide. The company sells a variety of domestic products and services, and conducts import, export and trilateral business transactions. It also provides domestic and international business investment and participates in numerous other activities across various industrial sectors worldwide.
The Zacks Consensus Estimate for fiscal 2026 earnings per share has improved 4.1% over the past month. SSUMY has a VGM Score of B.
Mission Produce sources, produces, packs, distributes and markets avocados principally in the United States and internationally. The company serves retail, wholesale and foodservice customers.
The Zacks Consensus Estimate for Mission Produce’s fiscal 2025 earnings has been revised upward by 13.6% to 67 cents per share over the past two months. AVO has a VGM Score of B.
Flexsteel Industries designs, manufactures, imports and markets residential furniture products in the United States. The company distributes its products across the nation through its e-commerce channel as well as a direct sales force.
Estimates for Flexsteel’s fiscal 2026 earnings have increased 5.5% to $3.85 over the past two months, depicting analysts’ optimism about the company’s prospects. Also, FLXS has a VGM Score of A.
FreightCar America designs, manufactures and supplies railroad freight cars, along with railcar parts and components. The company also provides railcar repair services, full railcar rebody solutions and railcar conversion projects that return idle rail assets to active, revenue-generating use.
The Zacks Consensus Estimate for FreightCar America’s current-year earnings has moved 14.9% north over the past three months to 54 cents per share. RAIL currently has a VGM Score of A.
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.