Cash is the lifeblood of any business. It offers the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. In fact, it holds the key to a company’s existence, development and success and indicates its true financial health.
Before investing in the right stocks, one must go beyond profit numbers and look at a company’s efficiency in generating cash flows. Because even a profitable business can succumb to failure if its cash flow is uneven and eventually, file for bankruptcy. However, one can effectively judge a company’s resilience by looking at its efficiency in generating cash flows. This is because cash not only shields it from market mayhem, but also indicates that profits are being channelized in the right direction.
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.
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 12 stocks that qualified the screening:
Israel-based Kamada Ltd. KMDA develops, produces and markets specialty plasma-derived protein therapeutics. The stock flaunts a VGM Score of A. Further, the Zacks Consensus Estimate for fiscal 2019 earnings moved 34.3% north to 47 cents, in the last 60 days.
Santa Cruz, CA-based Plantronics Inc. PLT is a global leader in audio communications for businesses and consumers, which enable people to communicate simply. It flaunts a VGM Score of A. The company’s expected earnings growth for fiscal 2019 is nearly 34.1%. The stock has witnessed positive estimate revisions, with the Zacks Consensus Estimate for fiscal 2019 earnings surging 78.3%, over the last 60 days, to $4.76.
Domiciled in St. George, UT, SkyWest, Inc. SKYW is the holding company for SkyWest Airlines and an aircraft leasing company. SkyWest provides commercial air service in cities throughout North America. The stock has a VGM Score of A. The company’s expected earnings growth for the current year is 9.06%. The Zacks Consensus Estimate for current-year earnings has been revised 5.1% upward, in 60 days’ time.
Fremont, CA-headquartered SYNNEX Corporation SNX is a business process services company, offering a wide-range of distribution, logistics and integration services to the technology industry. The company also offers outsourced services dedicated to customer engagement to a wide array of enterprises. The stock has a VGM Score of A. The company’s projected earnings growth for fiscal 2019 is 8.45%. The Zacks Consensus Estimate for fiscal 2019 earnings per share climbed 1.2%, over the last 90 days.
Walker & Dunlop, Inc. WD, based in Bethesda, MD, is a commercial real estate finance company in the United States, offering a broad range of capital solutions for all commercial real estate asset classes, as well as investment sales brokerage services to owners of multifamily properties. The stock has a VGM Score of B. The Zacks Consensus Estimate for full-year 2019 earnings moved 4.2% upward in two months’ time.
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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.
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SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Plantronics, Inc. (PLT) : Free Stock Analysis Report
SYNNEX Corporation (SNX) : Free Stock Analysis Report
Walker & Dunlop, Inc. (WD) : Free Stock Analysis Report
Kamada Ltd. (KMDA) : Free Stock Analysis Report
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