Scoop Up Big Gains With 4 Stocks Enjoying Rising Cash Flows

Making profits is undoubtedly a company’s primary 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 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 TimkenSteel Corp. TMST, Deutsche Post AG DPSGY, PDC Energy, Inc. PDCE and ModivCare Inc. MODV are worth buying.

A healthy cash position indicates that profits are being efficiently channelized to the company’s reserves. This gives a company the flexibility to make decisions, chase potential investments and fuel its growth engine. Cash flow is indeed a true indicator of a company’s financial health and a measure of its resiliency.

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 15 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 22.7% over the past two months. TMST currently flaunts a VGM Score of A.

Deutsche Post AG, one of the world’s largest logistics services companies, operates in Germany, Europe, America, Asia Pacific and other regions. The company's operating segment consists of Post-eCommerce-Parcel; Express; Global Forwarding, Freight and Supply Chain.

The consensus estimate for Deutsche Post AG’s ongoing-year earnings has moved 3.9% north to $4.76 in two months’ time. DPSGY currently carries a VGM Score of A.

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 5% north to $7.82 over the past month. PDCE currently carries a VGM Score of B.

ModivCare is a technology-enabled healthcare services company. It provides a suite of integrated supportive care solutions for public and private players and their patients.

The Zacks Consensus Estimate for ModivCare’s 2021 earnings has been revised upward by 17.5% to $7.53 in the past 30 days. MODV currently has a VGM Score of B.

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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.

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Deutsche Post AG (DPSGY) : Free Stock Analysis Report
 
PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
 
Timken Steel Corporation (TMST) : Free Stock Analysis Report
 
ModivCare Inc. (MODV) : Free Stock Analysis Report
 
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