It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"
When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Quanex Building Products (NYSE: NX ) .
Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.
Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.
Hot Services Stocks To Buy Right Now: LodgeNet Interactive Corporation(LNET)
LodgeNet Interactive Corporation provides interactive media and connectivity services to the hospitality industry in the United States, Canada, and Mexico. The company designs, develops, and operates interactive television (TV) systems at hotel properties that provide guest entertainment and other interactive services, including on-demand movies, TV programming, and digital music programming; daily subscription sports programming; on-screen controls; and interactive guest marketing and merchandising. It also offers basic and premium cable TV programming to hotels; Envision, a platform that connects high-definition guest room TVs to Internet-sourced content and information; LodgeNet Mobile App, which enables travelers to control the in-room TV with their iPhone, Android phone, or iPad, as well as discover the on-demand content on its interactive TV system, and access hotel and local area information and services; and Internet access through the sale and installation of equi pment. In addition, the company designs, installs, and operates wired and wireless Internet access systems at hotel properties; sells interactive TV systems to international licensees, as well as provides system planning, technical installation, project management, and support services to hotels; markets and sells guest entertainment interactive systems to hotels with support services; sells and installs cable TV programming systems; provides interactive TV infrastructure and content to the healthcare industry; and engages in the sale of advertising-based media services in hospitality media and connectivity. As of December 31, 2011, it provided interactive media and connectivity services to approximately 1.6 million hotel rooms in North America and internationally; and installed systems in 68 healthcare facilities representing approximately 15,900 beds. The company was founded in 1980 and is headquartered in Sioux Falls, South Dakota.
Hot Services Stocks To Buy Right Now: Schlumberger N.V.(SLB)
Schlumberger Limited, together with its subsidiaries, supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. The company?s Oilfield Services segment provides exploration and production services; wireline technology that offers open-hole and cased-hole services; supplies engineering support, directional-drilling, measurement-while-drilling, and logging-while-drilling services; and testing services. This segment also offers well services; supplies well completion services and equipment; artificial lift; data and consulting services; geo services; and information solutions, such as consulting, software, information management system, and IT infrastructure services that support oil and gas industry. Its WesternGeco segment provides reservoir imaging, monitoring, and development services; and operates data processing centers and multiclient seismic library. This segment also offers variou s services include 3D and time-lapse (4D) seismic surveys to multi-component surveys for delineating prospects and reservoir management. The company?s M-I SWACO segment supplies drilling fluid systems to improve drilling performance; fluid systems and specialty tools to optimize wellbore productivity; production technology solutions to maximize production rates; and environmental solutions that manages waste volumes generated in drilling and production operations. Its Smith Oilfield segment designs, manufactures, and markets drill bits and borehole enlargement tools; and supplies drilling tools and services, tubular, completion services, and other related downhole solutions. The company?s Distribution segment markets pipes, valves, and fittings, as well as mill, safety, and other maintenance products. This segment also provides warehouse management, vendor integration, and inventory management services. Schlumberger Limited was founded in 1927 and is based in Houston, Texas.
Advisors' Opinion:- [By Michael]
Schlumberger Limited (NYSE: SLB): Cramer also had more than $100,000 invested in SLB. As of Feb. 15, his charitable trust owns 1,300 shares for a total of about $100,724. SLB is also quite popular among hedge funds. At the end of last September, there were 42 hedge funds with SLB positions in their 13F portfolios. Ken Fisher was the most bullish hedge fund manager about SLB -- Fisher Asset Management had nearly $500 million invested in SLB at the end of the third quarter. Jim Simons’ Renaissance Technologies also invested nearly $200 million in this stock.
Schlumberger has reasonable debt levels, growing net income and revenue, and healthy cash flow from operations. It is relatively expensive compared with its competitors though. SLB has a forward P/E ratio of 13.6. Its expected annual EPS growth rate is 21.82% on the average for the next five years, which means that its P/E ratio for 2014 will be around 9.2. This is quite low compared with the market, but not so versus its peers.
- [By Dug]
Schlumberger(SLB) continues to lead the sector, particularly outside the U.S. in the growing markets for vertical drilling. Schlumberger remains my favorite. Another smaller company to look at with growing work in complex procedures is Helmerich & Payne(HP).
Top Stocks For 2014: Charter Communications Inc.(CHTR)
Charter Communications, Inc., through its subsidiaries, provides entertainment, information, and communications solutions to residential and commercial customers in the United States. The company offers cable video programming services, such as basic and digital video, premium channels, OnDemand, pay-per-view, high definition television, digital video recorder, and online video services; Internet services; Charter.net, which provides multiple e-mail addresses, as well as various entertainment, games, news, and sports content; and telephone services. It also provides broadband communications solutions, such as Internet access, data networking, fiber connectivity to cellular towers and office buildings, video entertainment services, and business telephone services under the Charter Business brand name to business and carrier organizations. As of December 31, 2011, the company served approximately 4.1 million video customers; approximately 3.5 million Internet customers; appr oximately 1.7 million telephone customers; and approximately 476,200 commercial primary service units. Charter Communications, Inc. was founded in 1999 and is based in St. Louis, Missouri.
Hot Services Stocks To Buy Right Now: Hyder Consulting(HYC.L)
Hyder Consulting PLC operates as a multi-national design and engineering consultancy. The company provides its consulting services in the property, transport, water, environment, energy, industry, and resources sectors in the United Kingdom, Europe, Australia, China, Hong Kong, Vietnam, and the Middle East. It offers environmental services, such as environmental assessment and management, corporate environmental risk assessment, waste and resources efficiency, sustainability, and coastal and catchment management services; geosciences services comprising land reclamation, contaminated land, and geotechnical engineering services; and management services, including asset management, management advisory, project management, and security and resilience services. The company also provides property services in the areas of acoustics, architecture, civil/development approval, facades, landscape, and urban planning; structural services in the areas of bridges, buildings, marine, tu nnels, and water; transport services consisting of highways, public transport planning, rail services, security of transport infrastructure, technology, traffic engineering, and road safety services; and water services, including water supply, modelling, and wastewater treatment. Hyder Consulting PLC is headquartered in London, the United Kingdom.
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