Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(Getty Images/iStockphoto)
(Getty Images/iStockphoto)

NUMBER CRUNCHER

20 U.S. companies gushing with cash Add to ...

What are we looking for?

U.S. companies that are showing an improving ability to produce gushers of cash – and put that cash to good use. Such firms are often attractive investments.

How we did it

Last week, our friend Craig McGee, senior consultant at CPMS Morningstar Canada, searched the Canadian stock market for companies that appeared to be boosting their operational efficiency. Today, he performs a similar search using the CPMS U.S. database.

More Related to this Story

He looked for firms that met four key criteria:

-high and increasing returns on invested capital (Mr. McGee measured this by looking at each firm’s earnings before interest and taxes, and dividing this figure by the total amount of the company’s debt and equity);

-high free-cash-flow yields;

-high free cash flow margins;

-a tendency over the past three months for analysts to increase their earnings estimates for the company.

To avoid the risk of investing in smaller firms, Mr. McGee required each company to have a market capitalization of more than $500-million (U.S.).

He then searched for the 20 companies with the best combination of the above factors, as well as reasonable valuations.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its investment research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers. CPMS data cover more than 95 per cent of the investable North American stock market.

What we found

The 20 stocks highlighted by Mr. McGee come from many different industries.

They have generally produced strong returns so far this year and for good reason – they are improving their operating efficiency and analysts expect further growth ahead.

Bargain hunters should take a close look at these companies. But, as always, remember that any stock screen is just a starting point. Do your own research before buying any of the names listed here.

Follow on Twitter: @IanMcGugan

 

U.S. companies showing high returns on invested capital

Rank Company Symbol Market
Cap
(US$ mil.)
1 Seagate Technology STX-Q 15,377
2 Questcor Pharmaceutical QCOR-Q 2,041
3 Sturm Ruger & Co Inc. RGR-N 983
4 Western Digital Corp. WDC-Q 14,993
5 Western Refining Inc. WNR-N 2,758
6 Cyberonics Inc. CYBX-Q 1,319
7 Green Dot Corp. GDOT-N 655
8 ITT Educational Svcs ESI-N 579
9 Wadell & Reed Fin. WDR-N 3,888
10 Trex Company Inc. TREX-N 948

Source: Morningstar Canada

Print

Download table as a CSV file

View full table

  • STX-Q
  • QCOR-Q
  • RGR-N
  • WDC-Q
  • WNR-N
  • CYBX-Q
  • GDOT-N
  • ESI-N
  • WDR-N
  • TREX-N
  • LSI-N
  • USNA-N
  • BKE-N
  • SYNT-Q
  • NUS-N
  • GBL-N
  • SAFM-Q
  • LF-N
  • GNRC-N
  • EXPO-Q
Live Discussion of STX on StockTwits
More Discussion on STX-Q
Live Discussion of QCOR on StockTwits
More Discussion on QCOR-Q
Live Discussion of RGR on StockTwits
More Discussion on RGR-N
Live Discussion of WDC on StockTwits
More Discussion on WDC-Q
Live Discussion of WNR on StockTwits
More Discussion on WNR-N
Live Discussion of CYBX on StockTwits
More Discussion on CYBX-Q
Live Discussion of GDOT on StockTwits
More Discussion on GDOT-N
Live Discussion of ESI on StockTwits
More Discussion on ESI-N
Live Discussion of WDR on StockTwits
More Discussion on WDR-N
Live Discussion of TREX on StockTwits
More Discussion on TREX-N
Live Discussion of LSI on StockTwits
More Discussion on LSI-N
Live Discussion of USNA on StockTwits
More Discussion on USNA-N
Live Discussion of BKE on StockTwits
More Discussion on BKE-N
Live Discussion of SYNT on StockTwits
More Discussion on SYNT-Q
Live Discussion of NUS on StockTwits
More Discussion on NUS-N
Live Discussion of GBL on StockTwits
More Discussion on GBL-N
Live Discussion of SAFM on StockTwits
More Discussion on SAFM-Q
Live Discussion of LF on StockTwits
More Discussion on LF-N
Live Discussion of GNRC on StockTwits
More Discussion on GNRC-N
Live Discussion of EXPO on StockTwits
More Discussion on EXPO-Q

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories