7 Large Cap Stocks With Strong Cash Flow Growth

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 |  Includes: CMCSA, EMC, F, IBM, MET, QCOM, SIEGY
by: Kapitall

Because of the many accounting estimates used to calculate net income, one way to gauge its reliability is by comparing it to operating cash flow. Since cash flow is very hard to manipulate on the books, it is a good measuring stick for performance.

With that in mind, we screened about 120 large cap stocks for those that have seen faster growth in quarterly operating cash flow year-over-year than that seen in quarterly net income. The screen produced 7 stocks, listed below.



Do you think the profitability of these companies is reliable? Use this list as a starting-off point for your own analysis.

List sorted by difference between quarterly net income growth and growth in quarterly operating cash flow.

1. Siemens AG (SI):
Telecom Service Industry. Market cap of $120.29B. Net Income grew by 88.97% ($2.8B vs. $1.5B y/y), while Operating Cash Flow grew by 122.42% ($3.2B vs. $1.4B y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock might be undervalued at current levels, with a PEG ratio at 0.71, and P/FCF ratio at 13.96. The stock has gained 46.61% over the last year.



2. International Business Machines Corp. (NYSE:IBM):
Diversified Computer Systems Industry. Market cap of $206.44B. Net Income grew by 10.07% ($2.9B vs. $2.6B y/y), while Operating Cash Flow grew by 32.23% ($2.6B vs. $1.9B y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock has gained 34.64% over the last year.



3. Ford Motor Co. (NYSE:F):
Auto Manufacturers Industry. Market cap of $57.43B. Net Income grew by 22.35% ($2.6B vs. $2.1B y/y), while Operating Cash Flow grew by 35.47% ($2.2B vs. $1.6B y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock has gained 30.91% over the last year.



4. QUALCOMM Incorporated (NASDAQ:QCOM): Communication Equipment Industry. Market cap of $94.24B. Net Income grew by 29.07% ($999.0M vs. $774.0M y/y), while Operating Cash Flow grew by 42.18% ($809.0M vs. $569.0M y/y) (comparing 3 months ending 2011-03-27 vs. 3 months ending 2010-03-28). The stock has gained 57.64% over the last year.

5. Comcast Corporation (NASDAQ:CMCSA):
CATV Systems Industry. Market cap of $70.18B. Net Income grew by 8.89% ($943.0M vs. $866.0M y/y), while Operating Cash Flow grew by 16.99% ($3.5B vs. $3.0B y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock has gained 47.16% over the last year.

6. EMC Corporation (NYSE:EMC):
Data Storage Devices Industry. Market cap of $57.12B. Net Income grew by 28.03% ($477.2M vs. $372.7M y/y), while Operating Cash Flow grew by 35.36% ($552.5M vs. $408.2M y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock has gained 52.53% over the last year.

7. MetLife, Inc. (NYSE:MET):
Life Insurance Industry. Market cap of $47.27B. Net Income grew by 20.48% ($1.0B vs. $835.0M y/y), while Operating Cash Flow grew by 27.26% ($1.1B vs. $829.0M y/y) (comparing 3 months ending 2011-03-31 vs. 3 months ending 2010-03-31). The stock has gained 12.31% over the last year.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.