Vox Screens Stocks: John & Justin pick two stocks from the Cash Rich Screen
Episode 926, Sep 29, 2022, 12:18 PM
Vox Screens Stocks: John & Justin pick two stocks from the Cash Rich Screen which filters for companies that are well funded, profitable & of good value.
With the economy facing a bleak outlook, and investors on edge, it’s likely to pay to be invested in companies that have the financial strength to survive even the harshest conditions.
Being well-funded is one important measure, so with this screen we’re looking for small companies with net cash on their balance sheet. But if a company is loss making, that cash could soon run out, so we’re also looking for companies generating positive free cash flow that won’t burn through their balance sheet – not least because raising money in the current environment is a tough ask.
Stocks are looking a lot cheaper at the moment after recent falls, but we still don’t want to overpay, so we’ve set the forecast PE limit to 15 – and have also applied a minimum of 5 to avoid any potential basket-cases.
For much the same reason we’ve also added a quality filter, return on capital employed which shows how efficiently a company is using its capital.
Here are the full screening criteria:
With the economy facing a bleak outlook, and investors on edge, it’s likely to pay to be invested in companies that have the financial strength to survive even the harshest conditions.
Being well-funded is one important measure, so with this screen we’re looking for small companies with net cash on their balance sheet. But if a company is loss making, that cash could soon run out, so we’re also looking for companies generating positive free cash flow that won’t burn through their balance sheet – not least because raising money in the current environment is a tough ask.
Stocks are looking a lot cheaper at the moment after recent falls, but we still don’t want to overpay, so we’ve set the forecast PE limit to 15 – and have also applied a minimum of 5 to avoid any potential basket-cases.
For much the same reason we’ve also added a quality filter, return on capital employed which shows how efficiently a company is using its capital.
Here are the full screening criteria:
- Market capitalisation of between £10m and £250m
- Net cash on the balance sheet
- A forecast PE ratio of between 5 and 15
- Positive forecast free cash flow
- Return on Capital Employed of at least 10.
John's Pick is:
Science Group #SAG
Science Group is an international, science-led services and product development organisation comprising three operating divisions: R&D Consultancy; Regulatory & Compliance; and Frontier Smart Technologies. The Group has a very strong balance sheet with significant cash resources and freehold property asset base. The Group provides products and services to clients in the key vertical markets of: medical, food & beverage, industrial and consumer. With offices throughout Europe and North America, two UK-based dedicated R&D innovation centres and employees fluent in over 30 languages Science Group supports a global client base in over 100 countries.
Justin's Pick is:
Yü Group #YU.
Yü Group PLC is driving innovation in energy and utility supply solutions for UK businesses. Yü Group offers a fresh approach to business utilities, delivered through a combination of user-friendly digital solutions and personalised, high quality customer service.
Trading under the brand Yü Energy, our multi-utility offer spans electricity, gas, water and other solutions for business customers across the UK, including playing a key role in supporting them in their transition to lower carbon technologies. We are committed to providing sustainable energy solutions to our customers, including the option to source 100% clean energy as part of our Pure Green plan.
Science Group #SAG
Science Group is an international, science-led services and product development organisation comprising three operating divisions: R&D Consultancy; Regulatory & Compliance; and Frontier Smart Technologies. The Group has a very strong balance sheet with significant cash resources and freehold property asset base. The Group provides products and services to clients in the key vertical markets of: medical, food & beverage, industrial and consumer. With offices throughout Europe and North America, two UK-based dedicated R&D innovation centres and employees fluent in over 30 languages Science Group supports a global client base in over 100 countries.
Justin's Pick is:
Yü Group #YU.
Yü Group PLC is driving innovation in energy and utility supply solutions for UK businesses. Yü Group offers a fresh approach to business utilities, delivered through a combination of user-friendly digital solutions and personalised, high quality customer service.
Trading under the brand Yü Energy, our multi-utility offer spans electricity, gas, water and other solutions for business customers across the UK, including playing a key role in supporting them in their transition to lower carbon technologies. We are committed to providing sustainable energy solutions to our customers, including the option to source 100% clean energy as part of our Pure Green plan.