For Immediate Release
Chicago, IL – February 9, 2018 - Stocks in this week’s article Kulicke&Soffa KLIC, SK Telecom Co., Ltd. SKM, Post Holdings, Inc. POST and Sanchez Midstream Partners LP SNMP.
Forget Profit, Bet on 4 Stocks with Increasing Cash Flows
The bulk of the Q4 earnings releases are behind us and investors are now interested in betting on stocks based on profit numbers and surprises. But looking beyond profits and figuring out a company’s ability to generate cash flows can be far more rewarding.
This is because cash indicates a company’s true financial health. It offers the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. In fact, even a company generating profits might face bankruptcy while meeting obligations if it is low on cash flow. However, a sturdy cash balance can safeguard companies in times of market turbulence.
Therefore, to effectively find out a company’s resilience and efficiency in generating cash flow, one needs to consider its net cash flow figure. In any business, cash moves in and out, it is net cash flow that indicates how much money the company is actually generating or burning. Having positive cash flows indicates enhanced liquidity, giving the company more power for debt repayment, expenses, dividend payouts, stock buyback and finally reinvestment in business. On the other hand, negative cash flow implies that a company’s liquid assets are decreasing, resulting in reduced 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, this earnings season and beyond, don’t look at profits only before picking stocks. Make sure to look for stocks with dependable and increasing cash flows.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/292701/forget-profit-bet-on-4-stocks-with-increasing-cash-flows
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Kulicke and Soffa Industries, Inc. (KLIC) : Free Stock Analysis Report
Post Holdings, Inc. (POST) : Free Stock Analysis Report
SK Telecom Co., Ltd. (SKM) : Free Stock Analysis Report
Sanchez Production Partners LP (SNMP) : Free Stock Analysis Report
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