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Buy 4 Stocks With Rising Cash Flows to Enrich Your Portfolio
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We are already into the second-quarter reporting cycle and stocks with top-line growth and increasing profit numbers might be popular choices. But choosing stocks based on a company’s efficiency in generating cash flows can be far more rewarding.
This is because even a profit-making company can have a dearth of cash flow and become bankrupt while meeting its obligations if its profits are not channeled in the right direction. But a company can effectively weather any market mayhem if it has a solid cash position as that lends a company the flexibility to make decisions, the means to invest and the fuel to run its growth engine. It is indeed the key to a company’s existence, development and success, and reveals its true financial health.
Furthermore, with uncertainties in the global economy, market disruptions and dislocations, as well as 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, it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in the 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 industry categories.
Here are four out of seven stocks that qualified the screening:
Ardmore Shipping, based in Pembroke, Bermuda, engages in the seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies.
The Zacks Consensus Estimate for ASC’s 2024 earnings per share has moved up 1.2% over the past week to $3.29. Ardmore has a VGM Score of A.
TXO Partners, L.P., based in Fort Worth, TX, is a master limited partnership focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas and natural gas liquid reserves principally in North America.
The Zacks Consensus Estimate for TXO Partners’ 2024 earnings per share has been revised 27.3% upward to $1.63 in the past month. TXO has a VGM Score of A.
GeoPark Limited, based in Colombia, is an independent oil and gas explorer, operator and consolidator. It has operations across Latin America.
The Zacks Consensus Estimate for GeoPark’s 2024 earnings per share has been revised 2.2% north over the past two months to $3.23 and indicates 50.9% year-over-year growth. GPRK has a VGM Score of A.
biote Corp. is a solutions provider in preventive health care through the delivery of personalized hormone optimization and therapeutic wellness.
The Zacks Consensus Estimate for biote Corp.’s 2024 earnings has been revised 17.4% upward to 27 cents per share over the past two months. BTMD has a VGM Score of A.
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.
Image: Bigstock
Buy 4 Stocks With Rising Cash Flows to Enrich Your Portfolio
We are already into the second-quarter reporting cycle and stocks with top-line growth and increasing profit numbers might be popular choices. But choosing stocks based on a company’s efficiency in generating cash flows can be far more rewarding.
In this regard, stocks like Ardmore Shipping Corporation (ASC - Free Report) , TXO Partners, L.P. (TXO - Free Report) , GeoPark Limited (GPRK - Free Report) and biote Corp. (BTMD - Free Report) are worth buying.
This is because even a profit-making company can have a dearth of cash flow and become bankrupt while meeting its obligations if its profits are not channeled in the right direction. But a company can effectively weather any market mayhem if it has a solid cash position as that lends a company the flexibility to make decisions, the means to invest and the fuel to run its growth engine. It is indeed the key to a company’s existence, development and success, and reveals its true financial health.
Furthermore, with uncertainties in the global economy, market disruptions and dislocations, as well as 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, it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in the 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 industry categories.
Here are four out of seven stocks that qualified the screening:
Ardmore Shipping, based in Pembroke, Bermuda, engages in the seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies.
The Zacks Consensus Estimate for ASC’s 2024 earnings per share has moved up 1.2% over the past week to $3.29. Ardmore has a VGM Score of A.
TXO Partners, L.P., based in Fort Worth, TX, is a master limited partnership focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas and natural gas liquid reserves principally in North America.
The Zacks Consensus Estimate for TXO Partners’ 2024 earnings per share has been revised 27.3% upward to $1.63 in the past month. TXO has a VGM Score of A.
GeoPark Limited, based in Colombia, is an independent oil and gas explorer, operator and consolidator. It has operations across Latin America.
The Zacks Consensus Estimate for GeoPark’s 2024 earnings per share has been revised 2.2% north over the past two months to $3.23 and indicates 50.9% year-over-year growth. GPRK has a VGM Score of A.
biote Corp. is a solutions provider in preventive health care through the delivery of personalized hormone optimization and therapeutic wellness.
The Zacks Consensus Estimate for biote Corp.’s 2024 earnings has been revised 17.4% upward to 27 cents per share over the past two months. BTMD has a VGM Score of A.
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.