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4 Stocks With Rising Cash Flows to Boost Your Portfolio

Moumita C. Chattopadhyay
·5-min read

Investors generally prefer businesses that earn profits. But even a profit-making company can end up being bankrupt while meeting its obligations if it has a dearth of cash flow. Therefore, rather than brooding too much on profit numbers, effectively judging a company’s resiliency by assessing its efficacy in generating cash flows can be far more rewarding.

In this regard, stocks like TimkenSteel Corp. TMST, Grindrod Shipping Holdings Ltd. GRIN, PDC Energy, Inc. PDCE and Carriage Services, Inc. CSV can be worth buying.

This is because, cash is the key to a company’s existence, development and success. It offers the flexibility to make decisions, the means to make investments and the fuel to run its growth engine, thereby indicating a company’s true financial health. In fact, cash not only shields a company from market mayhem but also indicates that its profits are being channelized in the right direction.

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 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:

TimkenSteel Corp. engages in manufacturing alloy steel, as well as carbon and micro-alloy steel. TMST provides air-melted alloy steel bars, tubes and precision components, as well as value-added services, including thermal treatment and machining. TimkenSteel’s customers include companies in the market sectors: oil & gas; automotive; industrial equipment; mining; construction; rail; aerospace and defense; heavy truck; agriculture, and power generation.

The Zacks Consensus Estimate for TimkenSteel’s 2021 earnings has moved up 25.2% over the past week. TMST currently flaunts a VGM Score of A.

Grindrod Shipping Holdings Ltd. is engaged in the ownership and operation of a diversified fleet of owned and long- and short-term chartered-in drybulk vessels. GRIN is based in Singapore.

The consensus estimate for Grindrod’s ongoing-year earnings has moved 35.2% north to $6.11 in a month’s time. GRIN currently carries a VGM Score of B.

PDC Energy, Inc., headquartered in Denver, CO, is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.

The Zacks Consensus Estimate for PDC Energy’s 2021 earnings has moved 3.4% north to $7.53 over the past week. PDCE currently carries a VGM Score of B.

Carriage Services, Inc. based in Houston, TX, is a leading provider of death care services and products in the United States. Carriage Services provides a complete range of services relating to funerals, burials and cremations. These include the use of funeral homes and motor vehicles, the performance of cemetery interment services, and management and maintenance of cemetery grounds by CSV.

The consensus estimate for Carriage Services’ current-year earnings has moved 14.7% north to $3.05 in a month’s time. CSV currently carries a VGM Score of B.

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.


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PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
 
Carriage Services, Inc. (CSV) : Free Stock Analysis Report
 
Timken Steel Corporation (TMST) : Free Stock Analysis Report
 
Grindrod Shipping Holdings Ltd. (GRIN) : Free Stock Analysis Report
 
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