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What are we looking for?

This week, we searched for U.S.-listed companies with consistent cash flow growth, favorable debt/equity ratios and high-quality factor ratings, demonstrating strong operational efficiency and overall financial stability. By pinpointing such stocks, investors can uncover potential investment opportunities that align with their objectives, whether they be for growth potential, reduced financial risk or high-quality performance in their portfolios.

The screen

We first set a minimum market capitalization threshold of US$1-billion, which offers stability, liquidity and access to well-established companies.

Next, we screened for U.S. stocks that have a quality factor rating of at least 70 out of 100 according to Trading Central’s quality factor rating methodology, which measures the total financial strength of the company in regard to profitability, the robustness of its balance sheet, and earnings quality.

Cash flow growth is a critical financial metric as it indicates a company’s ability to generate cash, sustain liquidity and meet financial obligations. Positive cash flow growth supports operational efficiency, investment capacity and debt servicing, enabling companies to fund growth initiatives, pay dividends and manage risk effectively. We set a minimum cash flow growth rate of 10 per cent last quarter, compared with the same period a year ago.

Finally, we were only interested in companies with a debt/equity ratio below one, which is beneficial to investors because it signifies that the company has lower financial risk, is better equipped to meet debt obligations, and has greater potential for growth and dividend sustainability.

We have also included price-earnings, dividend yield and one-year returns for reference.

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and worldwide.

What we found

Financially stable stocks

RANK COMPANYTICKERINDUSTRYMKT.CAP. ($Bil) RECENT PRICE ($)TC QLT.FCTR.RTNGCASH.GRTH.LST.QTRDEBT/EQTY.DIV.YLD (%)YTD PERF. (%)1Y PERF. (%)
1Alamos Gold IncAGI-NMetals & Mining5.0212.577554.8100.7924.671.2
2Wheaton Precious Metals CorpWPM-NMetals & Mining19.5642.577084.6601.41038.3
3Teekay Tankers LtdTNK-NOil & Gas1.4542.6681149.710.222.3538.130.8
4Cisco Systems IncCSCO-QHardware218.0353.38635.530.192.912.928.4
5Bunge LtdBG-NConsumer Packaged Goods15.86104.578561.480.552.525.616.2
6ChampionX CorpCHX-QOil & Gas6.8134.117457.680.390.9819.449.9
7Stryker CorpSYK-NMedical Devices & Instruments102.61269.497337.840.751.1110.524.7
8Enerpac Tool Group CorpEPAC-NIndustrial Products1.6328.917621.290.70.1413.923
9Procter & Gamble CoPG-NConsumer Packaged Goods353.6147.677414.310.772.51-115.8
10Humana IncHUM-NHealthcare Plans64.64520.3474210.610.720.681.94.3
11State Street CorporationSTT-NAsset Management21.8767.97211.810.784.02-11.56.3
12WR Berkley CorpWRB-NInsurance16.864.817939.270.410.67-10.1-8.7
13Commerce Bancshares IncCBSH-QBanks6.148.8178174.120.382.21-28.1-26.3

Source: Trading Central

Topping our list is Alamos Gold Inc., a Canadian-based gold producer with diversified production from three operating mines in North America. The stock has a TC Quality factor rating of 75 out of 100, which is very strong. The company has no debt obligations. Looking at stock price performance, Alamos Gold has the highest one-year return on our list at an impressive 71.2 per cent and is trading within 10 per cent of its most recent 52-week high.

Cisco Systems Inc., a leading global supplier of network, hardware and software has the highest market cap on our list at US$218-billion and the highest TC Quality factor rating on our list at an impressive 85 out of 100. The company also has a low debt/equity ratio of 0.19.

Teekay Tankers Ltd., a Bermuda-based provider of marine transportation to global oil industries, is the smallest company on our list with a market cap of US$1.45-billion. The Quality factor rating is one of the highest on our list at 81 out of 100. The stock has the best year-to-date price performance on our list at 38.1 per cent.

Trading Central Strategy Builder provides a back-testing capability to evaluate how well an investing strategy would have worked in the past. Using a five year historical period with quarterly rebalancing, the screen described had a 13-per-cent annualized return compared with 9 per cent for the S&P 500 index.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/02/24 6:40pm EST.

SymbolName% changeLast
AGI-N
Alamos Gold Inc
+0.26%11.54
WPM-N
Wheaton Precious Metals
+0.66%39.76
TNK-N
Teekay Tankers Ltd
+0.92%55.1
CSCO-Q
Cisco Systems Inc
-0.52%48.06
BG-N
Bunge Ltd
+0.67%93.74
CHX-Q
Championx Corp
-0.99%31.12
SYK-N
Stryker Corp
-0.12%351.8
EPAC-N
Actuant Corp
-0.62%33.59
PG-N
Procter & Gamble Company
+0.47%160.05
HUM-N
Humana Inc
-3.18%351.16
STT-N
State Street Corp
-0.15%73.37
WRB-N
W.R. Berkley Corp
-0.38%84.56
CBSH-Q
Commerce Bancshares
-1.43%51.78

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