In his latest column for Canada’s Globe and Mail, Validea CEO John Reese looks at companies with high free cash flow yields.
“Cash: It’s the lifeblood of any business,” Reese writes. “That may seem obvious, but it’s something that can easily be forgotten — just look at what happened to overleveraged, overextended companies during the financial crisis in 2008. … Companies that have lots of cash freed up can also be attractive targets for investors. In fact, some of the world’s most successful investors focus on free cash flow — which, generally, is the amount of cash a firm generates once you subtract the amount it takes to run its business, including capital expenditures.”
Reese notes that free cash flow can be a more reliable financial indicator than profit, which can be more easily manipulated through accounting gimmickry. He takes a look at four stocks that have high free cash flow yields and also get approval from his Guru Strategies, each of which is based on the approach of a different investing great. Two of the picks are U.S.-traded stocks, while two are listed in Canada. Among them: Nashville-based ambulatory surgery center firm AmSurg Corp. To read the full article, click here.