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For Immediate Release
Chicago, IL – October 12, 2017 - Stocks in this week’s article PFSweb, Inc. (Nasdaq: (NASDAQ:PFSW) – Free Report), Kirkland's, Inc. (Nasdaq: (NASDAQ:KIRK) – Free Report), Modine Manufacturing Company (NYSE: (NYSE:MOD) – Free Report) and Radian Group Inc. (NYSE: (NYSE:RDN) – Free Report).
Screen of the Week of Zacks Investment Research by:
Look Beyond Profit: Bet on 4 Stocks with Rising Cash Flows
Investors can be lured by big profits and solid earnings surprises this earnings season. But looking beyond profits and assessing a company’s cash position can be far more rewarding. This is because, even though profit is a company’s goal, cash is the lifeblood for its existence, development and success, and indeed a measure of its resilience.
In fact, even a profitable business can succumb to failure if its cash flow is uneven and eventually file for bankruptcy. But a company with healthy cash position has the capability to effectively tide over any market mayhem and still be on the growth curve, besides enjoying flexibility to make decisions, chase potential investments and run its growth engine.
To find out the efficiency of a company, one needs to consider its net cash flow. While, in any business, cash moves in and out, it is net cash flow that explains how much money the company is actually generating.
A positive cash flow indicates an increase in the company’s liquid assets, which provide 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, negative cash flow indicates a decline in the company’s liquidity and in turn lowers its flexibility to support these moves.
However, positive cash flow alone is not sufficient to predict a company’s growth. A company can competently grow only when this positive cash flow is rising, because this improvement indicates management’s efficiency in regulating its cash movements and lesser dependency on external financing sources for running its business.
So, while picking stocks, look beyond profits and select companies with dependable and increasing 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 six stocks that qualified the screening:
PFSweb, Inc. (Nasdaq: PFSW – Free Report), headquartered in Allen, TX, provides eCommerce and multichannel outsourcing solutions for global consumer brands, online retailers and brand manufacturers. This includes eCommerce technology, order management, customer care, global logistics and fulfillment services. The company has a VGM Score of A.
In the trailing four quarters, the stock delivered an average beat of 8.9%. The Zacks Consensus Estimate for 2017 earnings has remained unchanged in a week’s time.
Kirkland's, Inc. (Nasdaq: KIRK – Free Report) is a leading specialty retailer of home decor in the United States. The company presently operates 411 stores in 36 states as well as an e-Commerce enabled website. The company is based in Brentwood, TN and has a VGM Score of B.
The stock has witnessed solid positive estimate revisions with the Zacks Consensus Estimate for fiscal 2017 earnings increasing 7.5% over the past 60 days.
Modine Manufacturing Company (NYSE: MOD – Free Report) operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The company is headquartered in Racine, WI, and has operations in North America, South America, Europe, Asia and Africa. It has a VGM Score of B.
The stock has also experienced solid estimate revisions. In fact, the Zacks Consensus Estimate for fiscal 2018 earnings has increased 1.4% in a week’s time.
Radian Group Inc. (NYSE: RDN – Free Report) offers private mortgage insurance, risk management products and real estate services to financial institutions. The company is headquartered in Philadelphia, PA. It has a VGM Score of B.
The stock has a long-term expected growth rate of 5%. Also, it experienced positive estimate revisions with the Zacks Consensus Estimate for 2017 earnings moving 0.6% north in a month’s time.
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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 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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