Investors are keeping a close watch on the Fed in recent times as it gears up for the rate announcement, with attention also on signals about its next moves. Rather than dwelling solely on policy shifts, focusing on cash-rich stocks with strong returns may present attractive opportunities, offering stability and growth potential amid the evolving economic landscape.
Cash is the lifeblood of any business. It offers strength, vitality and flexibility to make investment decisions, and the fuel to run its growth engine. Moreover, cash shields a company from market turmoil and indicates that profits are being channeled in the right direction.
In this regard, stocks such as Materion Corporation MTRN, Willdan Group, Inc. WLDN, Build-A-Bear Workshop, Inc. BBW and NCS Multistage Holdings, Inc. NCSM are worth buying.
One must go beyond profit numbers and look at a company’s efficiency in generating cash flows to invest in the right stocks. This is because even a profit-making company can have a dearth of cash flow and fail to meet its obligations. However, a company’s resiliency can be fairly judged when its efficacy in generating cash flows is assessed. This holds more relevance in the current context amid uncertainties in the global economy, market disruptions and dislocations.
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 nine stocks that qualified the screening:
Materion specializes in the manufacture and supply of high-performance engineered materials both in the United States and globally. Its product portfolio includes precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, beryllium and beryllium composites, as well as engineered clad and plated metal systems.
The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the past two months. MTRN currently has a VGM Score of B.
Willdan Group delivers professional, technical, and consulting services to utilities, private companies and government agencies at all levels. The company helps clients achieve cost and energy efficiencies through a broad array of specialized solutions.
The Zacks Consensus Estimate for Willdan Group’s current-year earnings has improved 27.7% over the past two months to $3.60. WLDN has a VGM Score of B.
Build-A-Bear Workshop is one of the leading retailers of stuffed animals, like teddy bears and related products. Customers stuff, dress, accessorize, and name teddy bears and other characters based on the company’s intellectual property, together with a variety of best-in-class licenses.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s fiscal 2026 earnings has been revised 3.9% upward to $4.03 per share over the past 30 days. BBW has a VGM Score of A.
NCS Multistage Holdings delivers engineered products and support services that help oil and gas operators optimize well completions and field development. Serving mainly exploration and production companies, NCS Multistage focuses on onshore wells, especially those with horizontal laterals in unconventional oil and natural gas formations.
The Zacks Consensus Estimate for current-year earnings has improved 62% over the past 60 days. NCSM 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.
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Build-A-Bear Workshop, Inc. (BBW): Free Stock Analysis Report Willdan Group, Inc. (WLDN): Free Stock Analysis Report Materion Corporation (MTRN): Free Stock Analysis Report NCS Multistage Holdings, Inc. (NCSM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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