4 Stocks With Rising Cash Flows to Survive Market Volatility – September 21, 2022

Investors are watching the Fed closely today as it prepares for the rate announcement. Eyes and ears are also tuned for clues as to the Fed’s future course of action. It’s no secret that the global market is at a critical juncture, and investors have been on a rollercoaster ride this year, with high inflation and a rapid rise in interest rates weighing on asset prices.

However, rather than overthinking it and staying on the sidelines, investors can take advantage of stocks that are cash cows and offer higher yields. And why not? Cash is the lifeblood of any business. It offers strength, vitality and flexibility to make investment decisions and the fuel to run its growth engine. In addition, cash protects a company from market turbulence and indicates that profits are being channeled in the right direction.

In this regard, stocks like AMN Healthcare Services, Inc. (AMN free report) Encore Wire Corporation (CABLE free report) Tecnoglass Inc. (TGLS Free report) and SP Plus Corporation (SP Free Report) are worth buying.

In fact, one has to go beyond earnings numbers and look at a company’s efficiency at generating cash flows to invest in the right stocks. This is because even a profitable business may lack cash flow and be unable to meet its obligations. However, a company’s resilience can be fairly assessed when its effectiveness in generating cash flows is assessed. This is more relevant in the current context of uncertainties in the global economy, market disruptions and dislocations, and liquidity concerns stemming from geopolitical tensions or the pandemic.

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To determine this efficiency, one must look at a company’s net cash flow. While cash flows in and out of every business, net cash flow explains how much money a business actually makes.

When a company experiences positive cash flow, it means an increase in its cash position, which enables it to meet debt obligations, pay expenses, reinvest in the business, weather downturns, and ultimately return wealth to shareholders. On the other hand, negative cash flow indicates a decrease in the company’s liquidity, which in turn reduces its flexibility to support these moves.

However, a positive cash flow alone does not ensure the future growth of a company. In order to ride the growth curve, a company must have increasing cash flow, as this indicates management’s efficiency in regulating its cash movements and less reliance on debt financing to operate the business.

So stay tuned to the screen below to bet on stocks with increasing cash flows.

Screening parameters:

To find stocks that have shown increasing cash flow over time, we looked for those whose Cash flow for the most recent quarter was at least equal to or greater than the five year average cash flow per common share. This implies a positive trend and increasing liquidity over a period of time.

We have decided to do this:

Zack’s Rank 1: Regardless of whether market conditions are good or bad, stocks with a Zacks rank of #1 (Strong Buy) have a proven history of outperforming. You can see the full list of today’s Zacks #1 Rank stocks can be found here.

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Average broker rating 1: This indicates that the brokers are also very hopeful about the future development of the company.

Current price greater than or equal to $5: This sorts out low-priced stocks.

VGM score of B or better: This score is also a great help when selecting stocks. Importantly, this rating system helps select the winning stocks in their industry categories.

Here are our four picks from the 16 stocks that qualified for screening:

AMN Health Services is a personnel service provider in the field of travel health. AMN Healthcare Services recruits and places nurses, doctors and other healthcare professionals for travel or permanent assignments in acute care facilities, doctor’s offices and other healthcare facilities.

The Zacks Consensus estimate of $11.26 per share for AMN Healthcare Services’ year-to-date earnings is up 8.2% over the past two months. AMN has a VGM score of B.

encore wire is a cost-effective copper electrical wire and cable manufacturer. The company is a major supplier of household cables for internal electrical wiring in houses, apartments and prefabricated houses, as well as construction cables for electrical distribution in commercial and industrial buildings.

The Zacks Consensus estimate for Encore Wire’s 2022 earnings has been revised upwards to $26.86 from $19.18 over the past two months. WIRE has a VGM score of A.

techno glass is a leading manufacturer of architectural glass, windows and related aluminum products serving the global residential and commercial end markets.

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Zacks consensus estimate for Tecnoglass’ 2022 earnings has been revised up 14.7% over the past two months to $2.57. TGLS has a VGM score of A.

SP Plus Corporation 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 Zacks Consensus estimate for SP Plus’ 2022 earnings was revised up 2.1% last month to $2.89 per share. SP has a VGM score of B.

Get the rest of the stocks on the list and start testing these and other ideas. All of this can be done with the stock picking and backtesting software Research Wizard.

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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 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 mentioned in this material.

Disclosure: Performance information on Zacks portfolios and strategies is available at: https://www.zacks.com/performance.

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