Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.
Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Altisource Portfolio Solutions (Nasdaq: ASPS ) , whose recent revenue and earnings are plotted below.
5 Best Stocks To Buy Right Now: Stewart Enterprises Inc.(STEI)
Stewart Enterprises, Inc., through its subsidiaries, provides funeral and cemetery products and services in the death care industry in the United States and Puerto Rico. The company also offers a range of funeral merchandise and services, as well as cemetery property, cremation, merchandise, and services. Its funeral homes provide various services and products, including the family consultation, removal and preparation of remains, usage of funeral home facilities for visitation, worship and funeral services, transportation services, flowers, and caskets. The company also sells cemetery property and related merchandise, which includes lots, lawn crypts, family and community mausoleums, monuments, markers, and burial vaults; and provides burial site openings and closings and inscriptions. In addition, it maintains cemetery grounds under cemetery perpetual care contracts and local laws. As of January 31, 2011, the company owned and operated 218 funeral homes and 141 cemeterie s. Stewart Enterprises, Inc. was founded in 1910 and is based in Jefferson, Louisiana.Advisors' Opinion:
- [By Chris Katje]
Service Corporation (SCI), the largest funeral home operator in the United States, made news last week with its large acquisition of Stewart Enterprises (STEI). The acquisition was well received by investors, as shares rose 8% on the day of the announcement. Together, the two companies will see huge cost savings advantages and a backlog that is currently undervalued.
- [By Brian Pacampara]
What: Shares of funeral-home operator Stewart Enterprises (NASDAQ: STEI ) soared 34% today, after larger rival Service Corp. International (NYSE: SCI ) agreed to acquire it in a deal worth about $1.4 billion.
5 Best Stocks To Buy Right Now: Strategic Energy Resources Ltd (SER.AX)
Strategic Energy Resources Limited engages in the exploration for oil and gas, and mineral properties in Australia. It primarily explores for oil and gas, iron oxide, copper, gold, nickel, graphite, and other base metals. The company holds interests in offshore petroleum exploration permits in the Gippsland Basin, Victoria; and in onshore petroleum exploration block in the Cooper Basin, South Australia. It also has interests in the flake graphite deposit located in Uley, South Australia; and mineral exploration licenses for projects in South Australia and Western Australia. Strategic Energy Resources Limited is based in Melbourne, Australia.
Top 5 Warren Buffett Stocks To Own For 2014: Johnson Matthey(JMAT.L)
Johnson Matthey Plc operates as a specialty chemicals company in the United Kingdom and internationally. The company operates in three divisions: Environmental Technologies, Precious Metal Products, and Fine Chemicals. The Environmental Technologies division supplies catalysts and related technologies for applications, which benefit the environment, such as pollution control, cleaner fuel, efficient use of hydrocarbons, and the hydrogen economy. It offers catalytic systems for emissions control from vehicles and industrial processes; and catalysts and specialist services, as well as designs and licenses chemical processes for chemical, oil, gas, and refining industries. This division also develops and manufactures catalysts and catalyzed components for a range of clean energy fuel cell systems. The Precious Metal Products division engages in refining, recycling, marketing, and distributing platinum group metals (pgms); fabricating products using precious metals and related materials, as well as pgm and base metal catalysts and pgm chemicals; and refining gold and silver. The Fine Chemicals division supplies active pharmaceutical ingredients, fine chemicals, and other specialty chemical products and services to a range of chemical and pharmaceutical industry customers, and industrial and academic research organizations. The company was founded in 1817 and is based in London, the United Kingdom.
5 Best Stocks To Buy Right Now: Community 1St Bk Ca (CFBN.OB)
Community 1st Bank provides various banking products and services to small and middle-market businesses, professionals, and not for profit organizations in California. The company offers various deposit products comprising checking accounts, savings accounts, health savings accounts, minor savings accounts, certificates of deposits, interest bearing demand accounts, and time deposits. It also provides a range of loan products, including commercial real estate financing, SBA loans, business credit lines, business term loans, construction loans, and business letters of credit, as well as consumer loans. In addition, the company offers personal and business credit cards, deposit courier services, and online banking, as well provides remote deposit capture and cash management accounts. It operates 2 branches in Roseville and Auburn. The company was incorporated in 2005 and is headquartered in Auburn, California.
5 Best Stocks To Buy Right Now: royal dutch shell `b`shs(RDSB.L)
Royal Dutch Shell plc operates as an oil and gas company worldwide. The company explores for and extracts crude oil and natural gas. It also converts natural gas to liquids to provide cleaner-burning fuels; markets and trades natural gas; extracts bitumen from mined oil sands and convert it to synthetic crude oil; and generates electricity from wind energy. In addition, it converts crude oil into a range of refined products, including gasoline, diesel, heating oil, aviation fuel, marine fuel, lubricants, bitumen, sulphur, and liquefied petroleum gas (LPG); and produces and sells petrochemicals for industrial use. The company holds interests in approximately 30 refineries; approximately 1,500 storage tanks and 150 distribution facilities; and fuels retail network of approximately 43,000 service stations under the Shell brand name. Royal Dutch Shell plc also markets its products under the Shell V-Power and Shell FuelSave brand names. In addition, the company offers lubricant s to the passenger cars, trucks, and coaches, as well as for industrial machinery in manufacturing, mining, power generation, agriculture, and construction industries. Further, it sells fuels, specialty products, and services to commercial customers; offers fuel for approximately 7,000 aircraft every day at 800 airports in 30 countries; provides fuels, lubricants, and related technical services to the marine industry; offers liquefied petroleum gas and related services to retail, commercial, and industrial customers for cooking, heating, lighting, and transport applications; provides transport, industrial, and heating fuels; and supplies approximately 11,000 tonnes of bitumen products. Additionally, the company produces a range of base chemicals, including ethylene, propylene, and aromatics; and intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol. Royal Dutch Shell plc is headquartered in The Hag ue, the Netherlands.