5 Stocks Worth Buying Now on Solid Cash Flow Growth

About this update from Sumitomo Chemical India Ltd.

Picking profit-making stocks for investments might be popular but not flawless. This is because even a profit-making company can have a deficiency of cash flow and become bankrupt while meeting its obligations. However, one can effectively judge a company’s resilience by looking at its efficiency in generating cash flows. In this regard, stocks such as Sumitomo Corporation SSUMY, IHI Corporation IHICY, Nomad Foods Limited NOMD, Great Lakes Dredge & Dock Corporation GLDD and Natural Gas Services Group, Inc. NGS are worth buying.Cash, which is indeed the lifeblood of any business, gives a company the flexibility to make decisions, the means to make potential investments and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and indicates that profits are being channelized in the right direction.Moreover, with uncertainties in the global economy, market disruptions and dislocations, as well as liquidity concerns resulting from geopolitical tensions, analyzing a company’s cash-generating efficiency holds more relevance in the current context. 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 increasin...

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