Buy These 5 Stocks With Rising Cash Flows to Scoop Up Big Gains

In the final leg of the ongoing reporting cycle, it might seem appropriate to lay a wager on stocks based on profit numbers and earnings surprises. However, looking beyond profits and evaluating a company’s cash position can be far more rewarding. This is because even though profit is a company’s goal, cash is its lifeblood, a measure of resiliency and an indicator of true financial health. 

In this regard, stocks such as Marubeni Corporation MARUY, Materion Corporation MTRN, Betterware de México, S.A.P.I. de C.V. BWMX, Euroseas Ltd. ESEA and Shinhan Financial Group Co., Ltd. SHG are worth buying.

Even a profit-making company can have a dearth of cash flow and face bankruptcy while meeting its obligations. Nonetheless, a healthy cash position indicates that profits are being efficiently channeled to the company’s reserves, which not only shield it from market mayhem but also offer flexibility to make decisions, chase potential investments and run its growth engine.

Analyzing a company’s cash-generating efficiency holds more relevance in the current context with 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 five stocks that qualified for the screening:

Marubeni Corporation, based in Tokyo, Japan, purchases, distributes and markets various industrial and consumer goods worldwide. It imports, exports and trades within the Japanese market in food, textiles, materials, pulp and paper, chemicals, energy, metals and mineral resources, and transportation machinery. It is also engaged in power projects and infrastructure, plants and industrial machinery, real estate development and construction, and finance, logistics and information industry.

The Zacks Consensus Estimate for Marubeni’s earnings for the fiscal year ending March 2026 has moved 18.8% north in the past week. MARUY currently has a VGM Score of A.

Materion is engaged in the production and supply of high-performance engineered materials in the United States and internationally. Products offered by the company comprise precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, beryllium and beryllium composites, and engineered clad and plated metal systems.

The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past week. MTRN currently has a VGM Score of B.

Betterware de México, S.A.P.I. de C.V. is a direct-to-consumer selling company principally in Mexico. It is primarily focused on the home organization and solutions segment. BWMX’s product portfolio includes home organization, kitchen preparation, food containers, smart furniture, technology and mobility, as well as other minor categories.

The Zacks Consensus Estimate for its current-year earnings has improved 11.3% over the past month. BWMX has a VGM Score of A.

Euroseas is an owner and operator of container carrier vessels and a provider of seaborne transportation for containerized cargoes.

The Zacks Consensus Estimate for Euroseas’ current-year earnings has moved 2.8% north in the past month. ESEA currently has a VGM Score of B.

Shinhan Financial Group is South Korea's largest financial services company. Alongside banking, SHG operates subsidiaries in securities, credit cards, asset management, leasing, bancassurance and project finance. 

The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the last month. SHG 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.

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