Achieving profit is undoubtedly a company’s goal, but having a healthy cash flow is imperative to its existence, development and success. And why not? Even a company generating profits succumbs to failure and faces bankruptcy while meeting its obligations if it has a dearth of cash flow. However, one can efficiently tide over any market mayhem if it has the cash to shield it.
In this regard, stocks like StoneX Group Inc. SNEX, Climb Global Solutions, Inc. CLMB, Graham Corporation GHM and Kingstone Companies, Inc. KINS are worth buying.
A healthy cash position indicates that profits are being efficiently channeled to the company’s reserves. This offers flexibility to make decisions, chase potential investments and fuel its growth engine. It is indeed an accurate indicator of a company’s financial health and a measure of resiliency.
Analyzing a company’s cash-generating efficiency has indeed become more relevant amid uncertainties in the global economy, market disruptions and dislocations, as well as 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, it denotes an increase in its liquid assets, which gives it the means to meet debt obligations, shell out for expenses, reinvest in the 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 industry categories.
Here are four out of 10 stocks that qualified for the screening:
StoneX Group provides financial services. Through its subsidiaries, the company offers execution, post-trade settlement, clearing and custody services.
The Zacks Consensus Estimate for StoneX Group’s fiscal 2025 earnings has moved 7.9% north in the past month and currently stands at $8.04 per share. SNEX has a VGM Score of A.
Climb Global Solutions is a value-added IT distribution and solutions company specializing in emerging and disruptive technologies. The company provides IT distribution and solutions for emerging companies, principally in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries.
The Zacks Consensus Estimate for the current year has improved 26.2% over the past month. CLMB has a VGM Score of A.
Graham designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. The company's products include steam jet ejector vacuum systems and liquid ring vacuum pumps, surface condensers, Heliflows, water heaters and various types of heat exchangers.
The Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has been revised upward by 8.4% in the past month. GHM has a VGM Score of B.
Kingstone Companies Inc. is engaged in the ownership of an insurance company. KINS focuses on automobile, motorcycle and homeowners’ insurance, and its customer base is primarily individuals rather than businesses. There are three Atlantic Insurance locations in eastern Pennsylvania. Each of the Barry Scott, Atlantic Insurance and Accurate Agency locations is wholly owned by KINS.
The Zacks Consensus Estimate for Kingstone’s current-year earnings has moved 2.9% north in the past month. KINS currently has a VGM Score of A.
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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.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpGraham Corporation (GHM) : Free Stock Analysis Report
Kingstone Companies, Inc (KINS) : Free Stock Analysis Report
StoneX Group Inc. (SNEX) : Free Stock Analysis Report
Climb Global Solutions, Inc. (CLMB) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
