Published on 1 Jul 2022 on Zacks via Yahoo Finance
Buy 4 Stocks With Increasing Cash Flows Ahead of Q2 Earnings
Crunching profit numbers and evaluating surprises may be a popular method for scooping up big gains in the impending Q2 earnings season. However, looking beyond profit and assessing a company’s cash position, which reveals its true financial health, can be far more rewarding.In this regard, stocks like Encore Wire Corporation WIRE, Universal Logistics Holdings, Inc. ULH, Hudson Technologies HDSN and Pangaea Logistics Solutions, Ltd. PANL are worth buying.Even a profitable business can fail if its cash flow is uneven and eventually file for bankruptcy. But a company can navigate any market mayhem and still be on the growth curve if it has sufficient cash flow. This is because cash gives a company the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. It indeed holds the key to its existence, development and success. Analyzing a company’s cash-generating efficiency also holds more relevance in the current context with uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions or the pandemic.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.
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