5 stocks with increasing cash flow to improve your portfolio
C.Ash is the lifeblood of every company. It provides the strength, vitality and flexibility to make investment decisions, as well as the fuel to run its growth engine. In addition, cash protects a company from market turmoil and indicates that profits are being steered in the right direction.
In fact, to invest in the right stocks, one needs to go beyond earnings numbers and consider a company’s efficiency in generating cash flows. This is because even a profitable company may be lacking in cash flow and unable to meet its obligations. However, a company’s resilience can be adequately judged by assessing its efficiency in generating cash flows.
In particular, uncertainties in the global economy, market upheavals and distortions as well as liquidity concerns as a result of the coronavirus pandemic have all the more underpinned the relevance of the analysis of a company’s cash-generating efficiency.
To determine this efficiency, one must consider a company’s net cash flow. While cash goes in and out of any business, net cash flow explains how much money a company actually makes.
When a company experiences positive cash flow, it means an increase in its cash and cash equivalents, which allows it to meet debts, settle expenses, reinvest in companies, endure downturns, and ultimately return assets to shareholders. On the other hand, a negative cash flow indicates a decrease in the company’s liquidity, which in turn reduces its flexibility to support these movements.
However, a positive cash flow does not ensure the future growth of a company. To ride the growth curve, a company’s cash flow needs to increase, as this demonstrates the efficiency of management in regulating its cash movements and the reduced reliance on debt financing to run its business.
So keep yourself up to date with the screen below to bet on stocks with rising cash flows.
To find stocks that have seen increasing cash flow over time, we’ve done the screen for those whose Cash flow for the last quarter of the report was greater than or equal to the 5-year average cash flow per common share. This implies a positive trend and an increase in cash over a period of time.
We also decided:
Zacks Rank 1: Regardless of whether market conditions are good or bad, stocks with a Zacks # 1 rank (strong buy) have proven outperformance. You can see the full list of current Zacks # 1 Rank stocks here.
Average broker rating 1: This suggests that brokers are very hopeful about the company’s future performance as well.
Current price greater than or equal to $ 5: This sorts out cheap stocks.
VGM score from B or better: This score is also of great help when choosing stocks. Importantly, this rating system helps in selecting the winning stocks in their individual industry categories.
Here are the five out of 17 stocks that qualified for screening:
Citi Trends, Inc. CTRN is an affordable retailer of urban fashion and accessories for the whole family. The stock currently carries a VGM score of A. The Zacks consensus estimate for FY2022 earnings has moved 30% north in one month to $ 6.50.
Titan Machinery Inc. TITN: The company owns and operates a network of dealer locations for agricultural and construction machinery with full service in North America and Europe. The stock currently has a VGM score of A. The Zacks Consensus Estimate for FY2022 earnings has been revised up 9.6% in one month to $ 1.95.
Grindrod Shipping Holdings Ltd. GRIN: It owns and operates a diversified fleet of its own and long- and short-term chartered bulk carriers. The stock currently has a VGM score of A. The Zacks consensus estimate for the current year has moved 31% north to $ 4.52 in one month.
Piper Sandler Company PIPR: This company is a focused securities firm dedicated to providing world class financial advice, investment products and transaction execution in select sectors of the financial services market. The stock currently has a VGM score of A. The Zacks consensus estimate for the current year’s earnings has been revised up 32.5% to $ 17.09 in two months.
Veritiv Corporation VRTV: This company provides North American business-to-business sales solutions. It offers packaging, print and print management, publishing, supply chain, building and logistics solutions that span the entire life cycle of the core business. The stock currently has a VGM score of B. The Zacks Consensus Estimate for this year’s earnings is up 45.6% in the past two months to $ 6.55.
Get the rest of the stocks on the list and test out these and other ideas. All of this can be done using Research Wizard stock selection and backtesting software.
The Research Wizard is a great place to start. It’s easy to use. Everything is in simple language. And it’s very intuitive. Start your Research Wizard trial today. And the next time you’re reading an economic report, open the research wizard, plug in your finds, and see which gems come out.
Disclosure: Officers, directors and / or employees of Zacks Investment Research may own or have sold securities and / or hold long and / or short positions in options mentioned in this material. An affiliate investment adviser may own or have sold short securities and / or hold long and / or short positions in options mentioned in this material.
Disclosure: Information on the performance of Zacks’ portfolios and strategies is available at: https://www.zacks.com/performance.
Tech IPOs with massive profit potential
In the past few years, many popular platforms and such as Uber and Airbnb have finally found their way into the public markets. But the biggest paydays came from lesser-known names.
The electric car maker X Peng, for example, shot up + 299.4% in just 2 months. Think about it like this …
If you had invested $ 5,000 in XPEV when you went public in September 2020, you could have cashed out $ 19,970 in November.
With record amounts of cash pouring into IPOs and a record breaking stock market, this year’s roster could be even more lucrative.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.