After slashing its overnight borrowing rate by a quarter point recently, the Federal Reserve has indicated fewer reductions in the upcoming years. However, instead of brooding too much on this, investors can benefit from stocks that are cash cows and offer higher returns.  

Cash is the lifeblood of any business. It offers strength, vitality and flexibility to make investment decisions, and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and indicates that profits are being channeled in the right direction.

In this regard, stocks like Interface, Inc. (TILE Quick QuoteTILE - Free Report) , Pursuit Attractions and Hospitality, Inc. (PRSU Quick QuotePRSU - Free Report) , Great Lakes Dredge & Dock Corporation (GLDD Quick QuoteGLDD - Free Report) and Natural Gas Services Group, Inc. (NGS Quick QuoteNGS - Free Report) are worth buying.

One must go beyond profit numbers and look into a company’s efficiency in generating cash flows to invest in the right stocks. This is because even a profit-making company can have a dearth of cash flow and fail to meet its obligations. However, a company’s resiliency can be fairly judged when its efficacy in generating cash flows is assessed. This holds more relevance in the current context amid uncertainties in the global economy, market disruptions and dislocations.

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 out of 12 stocks that qualified the screening:

Interface is a global flooring solution provider, delivering a range of carpet tile and resilient flooring, which it markets under the Interface and FLOR brands, for both commercial and residential environments.

The Zacks Consensus Estimate for Interface’s 2025 earnings has been revised upward 8.8% to $1.85 per share in the past two months. TILE has a VGM Score of A.

Pursuit Attractions and Hospitality is an attraction and hospitality company that owns and operates hospitality destinations in the United States, Canada and Iceland. PRSU operates various attractions and lodges with integrated restaurants, retail and transportation facilities.

The Zacks Consensus Estimate for Pursuit Attractions and Hospitality’s 2025 earnings per share has improved 1.6% over the past week. PRSU has a VGM Score of A.

Great Lakes Dredge & Dock is the largest provider of dredging services in the United States, conducting business to maintain and deepen shipping channels, reclaim land from the ocean and renourish storm-damaged coastline.

The Zacks Consensus Estimate for Great Lakes Dredge & Dock’s 2025 earnings has moved upward by 7.8% to $1.10 per share over the past two months. GLDD has a VGM Score of A.

Natural Gas Services Group manufactures, fabricates, sells, rents and services natural gas compressors that enhance the production of natural gas wells. 

The Zacks Consensus Estimate for Natural Gas Services Group’s 2025 earnings per share has improved 9.5% over the past two months. NGS has a VGM Score of B.

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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.