When assessing stocks, many investors use various metrics such as the price-to-earnings ratio (P/E) and market capitalization. But it’s important not to overlook cash flow, which is “always needed in a rough market,” according to a recent Zacks article. Generally speaking, the lower a company’s price-to-cash-flow ratio (P/CF) is, the better.
Airlines’ P/CF ratios have been attractive lately with the decline in fuel prices—one of the industry’s top expenses—not to mention more disciplined capacity growth. This has been a boon for the U.S. Global Jets ETF (JETS).
Article summary written by U.S. Global Investors.