If we’re heading into a time of increased risk in the stock market, investors might be well-served by owning shares of companies that not only generate a lot of cash, but also grow that money rapidly.
Berkshire Hathaway CEO Warren Buffett has explained the importance of cash flow in his annual letters to shareholders, including the 2020 letter, when he wrote that the company’s insurance businesses had an important industry advantage: “Overall, the insurance fleet operates with far more capital than is deployed by any of its competitors worldwide.
A blind focus on the highest free-cash-flow CAGR would have the problem of highlighting companies that had unusually low cash flows for the beginning period. So for the three-year free-cash-flow CAGR ranking we began with the 50 companies in the S&P 500 Index SPX, +0.19% with the highest free cash flow for calendar 2017, and then ranked them by FCF CAGR for three years through 2020. We used calendar years because many companies have fiscal years that don’t match the calendar.
You can scroll the table to see how each company’s free cash flow increased or declined over the past three years. The CAGR calculation only uses the 2020 and 2017 year-end numbers. CVS underlines the imperfection of any one-point stock screen. The company made the three- and five-year lists because of the increase in cash flow from its transformative acquisition of Aetna in November 2018. After a few more years, it will be interesting to see how rapidly the combined company is able to grow its cash flow from a 2019 baseline.
During calendar 2015, Apple had the highest free cash flow of $63.37 billion among S&P 500 companies. That’s much higher than the company’s $52.91 billion in FCF in 2017. It also explains why the company’s five-year FCF CAGR through 2020 was only 4.8% and why its three-year CAGR was so much higher at 14.9%. This illustrates the importance of seeing the data for each year, even though the CAGR calculations only make use of the starting and ending data points.
just tell your owners let the squeeze happen Than we can reinvest sooner Be more than happy to load up on some amazon and Facebook So many stocks gona get paid. Hurry
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Been very long in $FB. Not disappointed
You mean Tech monopolies only makes sense
thanks