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Crunching profit numbers and evaluating surprises may be a preferred method for scooping up big gains this earnings season. However, what is far more rewarding is an assessment of a company’s cash position because that indicates its true financial health.
Even a profit making company can face a dearth of cash flow and end up being bankrupt if its profits are not channelized in the right direction. But a company with adequate cash flow can withstand any market mayhem and still be on the growth track.
This is because, cash gives a company the vitality and strength. It offers flexibility to make decisions, the means to make potential investments and the fuel to run the growth engine. It is the key for its existence, development and success and can indeed be referred to as the lifeblood of the company.
Obviously, cash flows in and out, but net cash flow indicates how much money the company is actually generating or burning. Positive cash flow indicates enhanced liquidity, giving the company more means for debt repayment, expenses, dividend payouts, stock buyback and finally reinvestment in business. On the other hand, a negative cash flow implies that a company’s liquid assets are decreasing, resulting in reduced flexibility to support these moves.
However, positive cash flow alone is not adequate to predict a company’s future growth. If cash flow is increasing over time, it indicates that a company’s competency is growing with management’s efficiency in regulating its cash movements, reaping more money from its business, depending less on outside financing and finally improving fundamentals.
Therefore, ahead of the Q1 earnings season, 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 four out of the nine stocks that qualified the screening:
Aegean Marine Petroleum Network Inc. , based in Athens, Greece, is a marine fuel logistics company that physically supplies and markets refined marine fuel and lubricants to ships in port and at sea. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings increased 6.5% over the past 60 days to $1.64. Moreover, over the past one year, Aegean Marine Petroleum shares outperformed the Zacks categorized Transportation - Shipping industry, registering a return of 60.3% against the industry’s decline of 3.0%.
Lundin Mining Corporation (LUNMF - Free Report) , headquartered in Toronto, Canada, is a rapidly growing, diversified base metals mining company with operations in Chile, the USA, Portugal, and Sweden, mainly producing copper, nickel and zinc. The company has a VGM Score of A. Moreover, it has an expected long-term growth rate of 34.1%.
Lundin Mining logged in a return of 72.4% over the past one year, which is way better than the 18.9% gain witnessed by the Zacks categorized Mining - Non Ferrous industry.
PCTEL, Inc. , headquartered in Bloomingdale, IL, designs, develops and delivers wireless solutions. Specifically, the company delivers Performance Critical TELecom technology solutions to the wireless industry and is a leading supplier of antennas and wireless network testing solutions. The company has a VGM Score of B.
The Zacks Consensus Estimate for 2017 earnings increased 25% over the past 60 days to $0.10. Also, over the past one year, PCTEL shares outperformed the Zacks categorized Wireless Equipment industry, registering a return of 52.8% against the industry’s decline of 1.6%.
SP Plus Corporation , based in Chicago, provides professional parking, ground transportation, facility maintenance, security and event logistics services to property owners and managers in all markets of the real estate industry. The company has a VGM score of A. Moreover, it has an expected long-term growth rate of 11.5%.
Also, SP Plus logged a return of 50.1% over the past one year, which is way better than the 4.9% loss incurred by the Zacks categorized Consumer Services - Miscellaneous industry.
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 backtesting 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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Bet on 4 Stocks With Increasing Cash Flows
Crunching profit numbers and evaluating surprises may be a preferred method for scooping up big gains this earnings season. However, what is far more rewarding is an assessment of a company’s cash position because that indicates its true financial health.
Even a profit making company can face a dearth of cash flow and end up being bankrupt if its profits are not channelized in the right direction. But a company with adequate cash flow can withstand any market mayhem and still be on the growth track.
This is because, cash gives a company the vitality and strength. It offers flexibility to make decisions, the means to make potential investments and the fuel to run the growth engine. It is the key for its existence, development and success and can indeed be referred to as the lifeblood of the company.
Obviously, cash flows in and out, but net cash flow indicates how much money the company is actually generating or burning. Positive cash flow indicates enhanced liquidity, giving the company more means for debt repayment, expenses, dividend payouts, stock buyback and finally reinvestment in business. On the other hand, a negative cash flow implies that a company’s liquid assets are decreasing, resulting in reduced flexibility to support these moves.
However, positive cash flow alone is not adequate to predict a company’s future growth. If cash flow is increasing over time, it indicates that a company’s competency is growing with management’s efficiency in regulating its cash movements, reaping more money from its business, depending less on outside financing and finally improving fundamentals.
Therefore, ahead of the Q1 earnings season, 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 four out of the nine stocks that qualified the screening:
Aegean Marine Petroleum Network Inc. , based in Athens, Greece, is a marine fuel logistics company that physically supplies and markets refined marine fuel and lubricants to ships in port and at sea. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2017 earnings increased 6.5% over the past 60 days to $1.64. Moreover, over the past one year, Aegean Marine Petroleum shares outperformed the Zacks categorized Transportation - Shipping industry, registering a return of 60.3% against the industry’s decline of 3.0%.
Lundin Mining Corporation (LUNMF - Free Report) , headquartered in Toronto, Canada, is a rapidly growing, diversified base metals mining company with operations in Chile, the USA, Portugal, and Sweden, mainly producing copper, nickel and zinc. The company has a VGM Score of A. Moreover, it has an expected long-term growth rate of 34.1%.
Lundin Mining logged in a return of 72.4% over the past one year, which is way better than the 18.9% gain witnessed by the Zacks categorized Mining - Non Ferrous industry.
PCTEL, Inc. , headquartered in Bloomingdale, IL, designs, develops and delivers wireless solutions. Specifically, the company delivers Performance Critical TELecom technology solutions to the wireless industry and is a leading supplier of antennas and wireless network testing solutions. The company has a VGM Score of B.
The Zacks Consensus Estimate for 2017 earnings increased 25% over the past 60 days to $0.10. Also, over the past one year, PCTEL shares outperformed the Zacks categorized Wireless Equipment industry, registering a return of 52.8% against the industry’s decline of 1.6%.
SP Plus Corporation , based in Chicago, provides professional parking, ground transportation, facility maintenance, security and event logistics services to property owners and managers in all markets of the real estate industry. The company has a VGM score of A. Moreover, it has an expected long-term growth rate of 11.5%.
Also, SP Plus logged a return of 50.1% over the past one year, which is way better than the 4.9% loss incurred by the Zacks categorized Consumer Services - Miscellaneous industry.
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 backtesting 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »