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The following is a list of tech stocks that have seen operating cash flows accelerate faster than net income during the most recent quarter. Since these companies are generating cash at a faster pace, it might offer an interesting starting point for your own analysis.

To create this list, we started with a list of the largest tech stocks by market cap. We then crunched the numbers on their financials, and identified a list of companies that have seen a big jump in their operating cash flow growth relative to net income growth during the most recent quarter. (Note: There are different ways of calculating operating cash flow. For this screen, we use the equation: Operating Cash Flow = EBIT + Depreciation - Taxes.)

Operating cash flow is arguably a better measure of a business' profits than earnings. Given the trends mentioned below, some might think these companies are set for a rally. Do you agree?

Financial data sourced from Google Finance, short float and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


1. Yahoo! Inc. (YHOO): Internet Information Providers Industry. Market cap of $21.12B. Net Income grew by 112.87% ($396.1M vs. $186.1M y/y), while Operating Cash Flow grew by 369.72% ($110.8M vs. $23.6M y/y) (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 5.28%, which implies a short ratio of 3.52 days. The stock has gained 4.92% over the last year.

2. MSCI Inc. (MSCI): Application Software Industry. Market cap of $4.14B. Net Income grew by 23.35% ($30.3M vs. $24.5M y/y), while Operating Cash Flow grew by 89.92% ($72.1M vs. $38.0M y/y) (comparing 3 months ending 2010-11-30 vs. 3 months ending 2009-11-300). Short float at 1.41%, which implies a short ratio of 2.84 days. The stock has gained 17.31% over the last year.

3. Corning Inc. (GLW): Communication Equipment Industry. Market cap of $34.63B. Net Income grew by 22.08% ($785.0M vs. $643.0M y/y), while Operating Cash Flow grew by 53.50% ($307.0M vs. $200.0M y/y) (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 1.95%, which implies a short ratio of 2.31 days. The stock has gained 20.5% over the last year.

4. NII Holdings Inc. (NIHD): Wireless Communications Industry. Market cap of $7.45B. Net Income grew by 1.31% ($118.5M vs. $117.0M y/y), while Operating Cash Flow grew by 26.75% ($306.9M vs. $242.2M y/y) (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 1.87%, which implies a short ratio of 1.85 days. The stock has gained 33.62% over the last year.

5. Windstream Corporation (WIN): Telecom Services. Market cap of $6.23B. Net Income grew by 6.50% ($85.2M vs. $80.0M y/y), while Operating Cash Flow grew by 27.72% ($400.4M vs. $313.5M y/y) (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 3.35%, which implies a short ratio of 3.31 days. The stock has gained 34.27% over the last year.

6. Maxim Integrated Products Inc. (MXIM): Semiconductor Industry. Market cap of $7.84B. Net Income grew by 86.92% ($109.6M vs. $58.6M y/y), while Operating Cash Flow grew by 107.81% ($118.1M vs. $56.9M y/y) (comparing 13 weeks ending 2010-12-25 vs. 13 weeks ending 2009-12-26). Short float at 3.9%, which implies a short ratio of 3.35 days. The stock has gained 52.68% over the last year.

7. Tibco Software, Inc. (TIBX): Business Software and Services Industry. Market cap of $3.63B. Net Income grew by 16.75% ($17.4M vs. $14.9M y/y), while Operating Cash Flow grew by 28.90% ($23.2M vs. $18.0M y/y) (comparing 3 months ending 2010-08-31 vs. 3 months ending 2009-08-31). Short float at 4.46%, which implies a short ratio of 2.89 days. The stock has gained 140% over the last year.

8. Cisco Systems, Inc. (CSCO): Networking and Communication Devices Industry. Market cap of $118.84B. Net Income grew by 8.00% ($1.9B vs. $1.8B y/y), while Operating Cash Flow grew by 10.80% ($2.0B vs. $1.8B y/y) (comparing 13 weeks ending 2010-10-30 vs. 13 weeks ending 2009-10-24). Short float at 0.74%, which implies a short ratio of 0.56 days. The stock has lost -4.8% over the last year.

9. CA Technologies (CA): Application Software Industry. Market cap of $12.15B. Net Income grew by 1.83% ($222.0M vs. $218.0M y/y), while Operating Cash Flow grew by 4.47% ($327.0M vs. $313.0M y/y) (comparing 3 months ending 2010-09-30 vs. 3 months ending 2009-09-30). Short float at 1.43%, which implies a short ratio of 1.65 days. The stock has gained 7.08% over the last year.

Source: Nine Tech Stocks With Rising Operating Cash Flow Trends