For Immediate Release
Look Beyond Profit: 5 Stocks with Rising Cash Flows
We are in one of the busiest weeks of the current reporting cycle, and betting on stocks based on profit numbers and earnings surprise is in trend. But looking beyond profits and figuring out a company’s cash position can be far more rewarding.
This is because, even though profit is a company’s goal, cash is a necessity for its existence, development and success, and indeed a measure of resiliency. In fact, even a profit-making company can face cash trouble and end up being bankrupt while meeting its obligations. But a company with a solid cash flow can endure any market mayhem besides enjoying flexibility in decision making, chasing potential investments and fueling its growth engine.
Moreover, analyzing a company’s cash-generating efficiency holds more relevance in the current context as the coronavirus pandemic is giving rise to uncertainties in the global economy, market disruptions and dislocations, and liquidity concerns.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1088017/look-beyond-profit-pick-these-5-stocks-with-rising-cash-flows
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.
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Contact: Jim Giaquinto
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