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Operating cash flows are directly related to stock value. One way to gauge a cash flow is by comparing it to the company’s common equity on its balance sheet. Seeing how well stockholders’ investment is generating cash can indicate the investment’s value.

Here we report on five technically oversold stocks (with RSI(14) below 40) that have seen high growth in this cash flow measure: trailing-12-month (TTM) operating cash flow/common equity at least 10% higher than the three-year average, and a three-year average at least 10% higher than the five-year average.

Note of caution: Stock repurchases that reduce the value of common equity can boost this ratio. We compared the ratios of TTM, three-year average, and five-year average to establish a longer-term pattern of cash flow improvement.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


List sorted by TTM operating CF/common equity.

1. Cedar Fair LP (NYSE:FUN): General Entertainment Industry. Market cap of $1.02B. RSI(14) at 38.4. TTM Operating CF/Common Equity at 2.10 vs. a 5-year average of 0.77. After a solid performance over the last year, the stock has pulled back during recent sessions. The stock is 4.84% below its SMA20 and 5.98% below its SMA50, but remains 10.07% above its SMA200. The stock has gained 58.25% over the last year.

2. DepoMed Inc. (NASDAQ:DEPO): Drug Manufacturers Industry. Market cap of $422.11M. RSI(14) at 39.8. TTM Operating CF/Common Equity at 1.26 vs. a 5-year average of -0.20. The stock is a short squeeze candidate, with a short float at 10.5% (equivalent to 6.48 days of average volume). The stock has gained 163.04% over the last year.

3. VeriFone Systems, Inc (NYSE:PAY): Business Equipment Industry. Market cap of $3.71B. RSI(14) at 38.53. TTM Operating CF/Common Equity at 0.69 vs. a 5-year average of 0.45. The stock has performed poorly over the last month, losing 11%.

4. Entercom Communications Corp. (NYSE:ETM): Broadcasting Industry. Market cap of $311.04M. RSI(14) at 36.97. TTM Operating CF/Common Equity at 0.63 vs. a 5-year average of 0.22. This is a risky stock that is significantly more volatile than the overall market (beta = 2.68). The stock is a short squeeze candidate, with a short float at 12.4% (equivalent to 16.39 days of average volume). The stock has performed poorly over the last month, losing 12.53%.

5. Powerwave Technologies Inc. (NASDAQ:PWAV): Communication Equipment Industry. Market cap of $495.67M. RSI(14) at 35.01. TTM Operating CF/Common Equity at 0.56 vs. a 5-year average of 0.00. This is a risky stock that is significantly more volatile than the overall market (beta = 2.92). The stock has performed poorly over the last month, losing 26.01%.

Operating CF/common equity sourced from Screener.co' all other data sourced from Finviz.

Source: 5 Oversold Stocks With Significant Increases in Cash Flows