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Solid Cash-Flow Growth Makes These 4 Stocks Worth Buying Now

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Picking profit-making stocks for investments might be a popular choice but not flawless. This is because even a profit-making company can have a deficiency of cash flow and become bankrupt while meeting its obligations. However, one can effectively judge a company’s resilience by looking at its efficiency in generating cash flows.  

Cash, which is indeed the lifeblood of any business, gives a company the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and also indicates that profits are being channelized in the right direction.

In addition, with the pandemic giving rise to uncertainties in the global economy, market disruptions and dislocations, and liquidity concerns, analyzing a company’s cash-generating efficiency holds more relevance.

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 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 the four out of the 11 stocks that qualified the screening:

Titan Machinery Inc. (TITN - Free Report) : The company owns and operates a network of full service agricultural and construction equipment dealer locations in North America and Europe.The stock currently has a VGM Score of A. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward to $1.67 from $1.44 in a month’s time.

Townsquare Media Inc. (TSQ - Free Report) operates as a radio, digital media, entertainment, and digital marketing solutions company in small- and mid-sized markets. The stock currently sports a VGM Score of A. The Zacks Consensus Estimate for 2021 earnings has moved up 13% over the past 60 days.

Piper Sandler Companies (PIPR - Free Report) is a focused securities firm dedicated to delivering superior financial advice, investment products and transaction execution within selected sectors of the financial services marketplace. The stock currently flaunts a VGM Score of A. The Zacks Consensus Estimate for current-year earnings has been revised 10.4% upward to $12.90 in 30 days’ time.

Grindrod Shipping Holdings Ltd. is engaged in the ownership and operation of a diversified fleet of owned and long-term and short-term chartered-in drybulk vessels. The stock currently carries a VGM Score of A. The Zacks Consensus Estimate for ongoing-year earnings has moved 72% north in the last 30 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.

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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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