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One of the most important considerations when choosing stocks is cash flow. Earnings may not always accurately reflect economic reality, but cash flow is very hard to manipulate. At the end of the day, cash flows keep companies afloat.

We ran a screen on companies exhibiting positive cash-flow growth trends, with high 10-year compound annual growth rates for free operating cash flow. These companies also have P/CF below 10, appearing undervalued. From this universe, we also searched for companies seeing significant decreases in shares shorted month-over-month (a bullish change). Finally, we screened for those also seeing significant net institutional buying over the current quarter.

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.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Do you think these companies will continue to generate more cash? Use this list as a starting-off point for your own analysis.

List sorted by net institutional purchases over the current quarter.

1. Photronics Inc. (PLAB): Semiconductor Industry. Market cap of $456.80M. P/CF at 9.82. Free operating cash flow 10-year CAGR at 25.58%. Net institutional purchases over the current quarter at 7.1M, which is 13.82% of the company's 51.39M share float. Shares shorted have decreased from 7.68M to 7.35M, a change representing 0.64% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.14). The stock is a short squeeze candidate, with a short float at 12.98% (equivalent to 9.04 days of average volume). The stock has gained 71.15% over the last year.

2. Amedisys Inc. (AMED): Home Health Care Industry. Market cap of $769.76M. P/CF at 6.57. Free operating cash flow 10-year CAGR at 35.09%. Net institutional purchases over the current quarter at 2.7M, which is 9.35% of the company's 28.87M share float. Shares shorted have decreased from 6.71M to 6.57M, a change representing 0.48% of the company's share float. The stock is a short squeeze candidate, with a short float at 22.63% (equivalent to 18.48 days of average volume). The stock has gained 1.75% over the last year.

3. Cash America International, Inc. (CSH): Credit Services Industry. Market cap of $1.64B. P/CF at 5.40. Free operating cash flow 10-year CAGR at 44.99%. Net institutional purchases over the current quarter at 2.6M, which is 8.92% of the company's 29.14M share float. Shares shorted have decreased from 4.16M to 4.05M, a change representing 0.38% of the company's share float. The stock is a short squeeze candidate, with a short float at 13.94% (equivalent to 13.71 days of average volume). The stock has gained 63.19% over the last year.

4. Unisys Corporation (UIS): Information Technology Services Industry. Market cap of $922.13M. P/CF at 4.28. Free operating cash flow 10-year CAGR at 6.81%. Net institutional purchases over the current quarter at 1.8M, which is 4.51% of the company's 39.95M share float. Shares shorted have decreased from 3.89M to 3.60M, a change representing 0.73% of the company's share float. The stock is a short squeeze candidate, with a short float at 8.41% (equivalent to 6.85 days of average volume). It's been a rough couple of days for the stock, losing 17.32% over the last week.

*Free operating cash flow CAGR and P/CF sourced from Screener.co, short data sourced from Yahoo! Finance, institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: 4 Strong Cash-Flow Growth Stocks With Bullish Short Trends and Smart Money Buying Interest