10 Smart Money Picks With Strong Operating Cash Flow Growth

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 |  Includes: AKRX, BMY, CEL, DAN, ESI, GHDX, OCN, OPTR, TIVO, WCRX
by: Kapitall

Company cash flow trends are a very important indicator of operational health. Because cash flows are not easily manipulated like the estimates that go into calculating net income (i.e. profits), cash flows are a very reliable measure of performance.

We ran a screen on stocks that have seen significant net institutional buying over the current quarter for those that have also seen significant growth in operating cash flow, comparing the trailing-twelve-month operating cash flow/common equity to the company’s five-year average.

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.

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.)

Do you think the smart money is calling it right on these names? Use this list as a starting-off point for your own analysis.

List sorted by net institutional shares purchased as a percent of share float.

1. Optimer Pharmaceuticals, Inc. (NASDAQ:OPTR) focuses on discovering, developing, and commercializing hospital specialty products worldwide. Market cap of $644.94M. TTM operating cash flow/common equity at 0.08 vs. 5-year average at -2.18. Net institutional shares purchased over the current quarter at 6.1M, which is 15.30% of the company's 39.86M share float. The stock is a short-squeeze candidate, with a short float at 17.9% (equivalent to 7.21 days of average volume). It's been a rough couple of days for the stock, losing 13.93% over the last week. The stock has had a good month, gaining 39.1%.

2. Akorn, Inc. (NASDAQ:AKRX) engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Market cap of $738.19M. TTM operating cash flow/common equity at 0.20 vs. 5-year average at -0.06. Net institutional shares purchased over the current quarter at 7.7M, which is 11.40% of the company's 67.56M share float. The stock is a short squeeze candidate, with a short float at 8.91% (equivalent to 5.91 days of average volume). It's been a rough couple of days for the stock, losing 13.43% over the last week.

3. Amylin Pharmaceuticals, Inc. (AMLN) engages in the discovery, development, and commercialization of drug candidates for the treatment of diabetes, obesity, and other diseases. Market cap of $1.35B. TTM operating cash flow/common equity at 0.09 vs. 5-year average at -0.12. Net institutional shares purchased over the current quarter at 14.4M, which is 11.0% of the company's 130.86M share float. The stock is currently stuck in a downtrend, trading 12.24% below its SMA20, 14.6% below its SMA50, and 28.16% below its SMA200. It's been a rough couple of days for the stock, losing 5.91% over the last week.

4. TiVo Inc. (NASDAQ:TIVO) provides technology and services for television solutions, including digital video recorders (DVRs) and connected televisions in the United States and internationally. Market cap of $1.13B. TTM operating cash flow/common equity at 0.82 vs. 5-year average at -0.02. Net institutional shares purchased over the current quarter at 11.9M, which is 10.90% of the company's 109.15M share float. The stock is a short squeeze candidate, with a short float at 14.68% (equivalent to 5.25 days of average volume). It's been a rough couple of days for the stock, losing 7.16% over the last week.

5. ITT Educational Services Inc. (NYSE:ESI) offers post-secondary degree programs in the U.S. that provide diplomas as well as associate's, bachelor's, and master's degrees. Market cap of $1.56B. TTM operating cash flow/common equity at 4.63 vs. 5-year average at 1.90. Net institutional shares purchased over the current quarter at 1.8M, which is 10.12% of the company's 17.79M share float. Might be undervalued at current levels, with a PEG ratio at 0.82, and P/FCF ratio at 2.97. The stock is a short squeeze candidate, with a short float at 34.42% (equivalent to 11.51 days of average volume). It's been a rough couple of days for the stock, losing 5.22% over the last week.

6. Cellcom Israel Ltd. (NYSE:CEL) provides cellular communications services in Israel. Market cap of $2.08B. TTM operating cash flow/common equity at 5.63 vs. 5-year average at 2.24. Net institutional shares purchased over the current quarter at 2.8M, which is 5.84% of the company's 47.97M share float. The stock has lost 25.53% over the last year.

7. Ocwen Financial Corp. (NYSE:OCN) provides residential and commercial mortgage loan servicing, special servicing, and asset management services. Market cap of $1.33B. TTM operating cash flow/common equity at 1.07 vs. 5-year average at 0.29. Net institutional shares purchased over the current quarter at 4.0M, which is 5.55% of the company's 72.09M share float. The stock is a short squeeze candidate, with a short float at 8.71% (equivalent to 7.1 days of average volume). The stock has had a couple of great days, gaining 5.01% over the last week.

8. Warner Chilcott plc (NASDAQ:WCRX) focuses on the development, manufacture, and promotion of branded pharmaceutical products in women's healthcare, gastroenterology, dermatology, and urology segments in North America and western Europe markets. Market cap of $3.63B. TTM operating cash flow/common equity at 1.11 vs. 5-year average at 0.37. Net institutional shares purchased over the current quarter at 8.4M, which is 5.45% of the company's 154.08M share float. The stock is currently stuck in a downtrend, trading 6.69% below its SMA20, 16.52% below its SMA50, and 35.05% below its SMA200. It's been a rough couple of days for the stock, losing 7.26% over the last week.

9. Genomic Health Inc. (NASDAQ:GHDX) focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. Market cap of $648.19M. TTM operating cash flow/common equity at 0.22 vs. 5-year average at -0.04. Net institutional shares purchased over the current quarter at 1.4M, which is 5.23% of the company's 26.77M share float. The stock is a short squeeze candidate, with a short float at 9.3% (equivalent to 19.2 days of average volume). The stock has had a couple of great days, gaining 9.63% over the last week.

10. Dana Holding Corporation (NYSE:DAN) engages in the design, manufacture, and supply of products for vehicle manufacturers worldwide. Market cap of $1.54B. TTM operating cash flow/common equity at 0.26 vs. 5-year average at -0.41. Net institutional shares purchased over the current quarter at 6.6M, which is 4.78% of the company's 138.12M share float. The stock is currently stuck in a downtrend, trading 7.67% below its SMA20, 16.99% below its SMA50, and 34.9% below its SMA200. The stock has performed poorly over the last month, losing 17.65%.

Operating cash flow/common equity sourced from Screener.co; institutional data sourced from Fidelity; 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.