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Look Beyond Profit, Buy 4 Stocks With Increasing Cash Flows
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If achieving profit is a company’s goal then having a healthy cash flow is most essential for its existence, development and success. Cash offers the company flexibility to make decisions, the means to make investments, the fuel to run its growth engine, and can indeed be called the lifeblood of any business.
Often investors flock to companies with top-line growth and increasing profit numbers. However, even a profit-making company can have a dearth of cash flow and face bankruptcy while meeting its obligations. Therefore, to invest in the right stocks, one must go beyond profit numbers and look at a company’s efficiency in generating cash flows because cash not only guards it from market mayhem, but also suggests that profits are being channelized in the right direction. In fact, cash indicates a company’s true financial health.
To find this efficiency, one needs to consider a company’s net cash flow figure. 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 then it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in 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 individual industry categories.
Here are four out of 10 stocks that qualified the screening:
Domiciled in Oak Brook, IL, Great Lakes Dredge & Dock Corp. (GLDD - Free Report) provides dredging services in the United States and internationally. It has a VGM Score of B. The Zacks Consensus Estimate for 2019 earnings of 74 cents per share indicates a 2.8% increase in the past 30 days.
Ingles Markets, Inc. (IMKTA - Free Report) is a leading supermarket chain with operations in the Southeastern United States. The company has a VGM Score of A. The stock has witnessed positive estimate revisions, with the Zacks Consensus Estimate for fiscal 2019 earnings moving 14.7% north in a month’s time.
North American Construction Group Ltd. (NOA - Free Report) is involved primarily in providing services related to mining and heavy construction in Canada. The stock has a VGM Score of A. The Zacks Consensus Estimate for 2019 earnings was revised nearly 29% upward in the past 60 days.
OneMain Holdings, Inc. (OMF - Free Report) provides consumer finance, and insurance products and services. The stock has a VGM Score of B. The Zacks Consensus Estimate for the current year moved 6.9% upward, over the past 60 days.
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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Look Beyond Profit, Buy 4 Stocks With Increasing Cash Flows
If achieving profit is a company’s goal then having a healthy cash flow is most essential for its existence, development and success. Cash offers the company flexibility to make decisions, the means to make investments, the fuel to run its growth engine, and can indeed be called the lifeblood of any business.
Often investors flock to companies with top-line growth and increasing profit numbers. However, even a profit-making company can have a dearth of cash flow and face bankruptcy while meeting its obligations. Therefore, to invest in the right stocks, one must go beyond profit numbers and look at a company’s efficiency in generating cash flows because cash not only guards it from market mayhem, but also suggests that profits are being channelized in the right direction. In fact, cash indicates a company’s true financial health.
To find this efficiency, one needs to consider a company’s net cash flow figure. 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 then it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in 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 individual industry categories.
Here are four out of 10 stocks that qualified the screening:
Domiciled in Oak Brook, IL, Great Lakes Dredge & Dock Corp. (GLDD - Free Report) provides dredging services in the United States and internationally. It has a VGM Score of B. The Zacks Consensus Estimate for 2019 earnings of 74 cents per share indicates a 2.8% increase in the past 30 days.
Ingles Markets, Inc. (IMKTA - Free Report) is a leading supermarket chain with operations in the Southeastern United States. The company has a VGM Score of A. The stock has witnessed positive estimate revisions, with the Zacks Consensus Estimate for fiscal 2019 earnings moving 14.7% north in a month’s time.
North American Construction Group Ltd. (NOA - Free Report) is involved primarily in providing services related to mining and heavy construction in Canada. The stock has a VGM Score of A. The Zacks Consensus Estimate for 2019 earnings was revised nearly 29% upward in the past 60 days.
OneMain Holdings, Inc. (OMF - Free Report) provides consumer finance, and insurance products and services. The stock has a VGM Score of B. The Zacks Consensus Estimate for the current year moved 6.9% upward, over the past 60 days.
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.