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 Orient-Express Hotels (NYSE: OEH ) , whose recent revenue and earnings are plotted below.
Top Stocks To Invest In: Prospero Silver Corp (PSL.V)
Prospero Silver Corp., together with its subsidiary, Minera Fumarola S.A. de C.V., engages in the acquisition, exploration, and development of mineral properties in Mexico. The company primarily explores for gold, silver, and base metals. Its properties include the Campana property consisting of 9 titled claims with an area of 6,035 hectares and an untitled claim of 7,226 hectares in north-central Durango; San Luis del Cordero project situated in Durango City in Durango state; Baborigame property comprising 8 claims with an area of 8,736 hectares located to the southwest of Chihuahua city in Chihuahua state; and Santa Maria del Oro project covering 33,800 hectares situated in Durango state. The company was founded in 2008 and is headquartered in Richmond, Canada.
Top Stocks To Invest In: Angle Energy Inc He Co.] (NGL.TO)
Angle Energy Inc. engages in the exploration, exploitation, development, and production of oil and natural gas reserves in Western Canada Sedimentary Basin, Canada. The company focuses on the recovery of liquids-rich natural gas and light crude oil. It owns interests in various properties located in the areas of Harmattan, Ferrier, Edson, and Lone Pine Creek in Alberta. As of December 31, 2011, the company had proved plus probable reserves of 18,575 thousand barrels of oil equivalent; and controlled 88,318 net acres of land. Angle Energy Inc. was founded in 2004 and is headquartered in Calgary, Canada.
Best Value Companies To Watch For 2014: Pacer International Inc.(PACR)
Pacer International, Inc., together with its subsidiaries, provides asset-light transportation and logistics services primarily in North America, Asia, Europe, Australia, South America, and Africa. It operates in two segments, Intermodal and Logistics. The Intermodal segment offers intermodal rail transportation, local cartage and trucking, intermodal marketing services, container capacity, on-site operational services, and door-to-door shipment management services. As of December 31, 2011, its equipment fleet consisted of 1,592 double-stack railcars, 18,183 containers, and 12,783 chassis. The Logistics segment provides highway brokerage, warehousing and distribution, international freight forwarding, ocean and air shipping, and supply chain management services, as well as offers non-vessel-operating common carrier to end-user customers. The company markets and supports its services to cargo owners, steamship lines, truckload carriers, truck brokers, and freight forwarders , as well as other third party transportation service providers, such as intermodal marketing companies, third-party logistics companies, and shippers? agents through its direct sales and customer service representatives. Pacer International, Inc. was founded in 1974 and is headquartered in Dublin, Ohio.
Top Stocks To Invest In: Pearl Healthcare Ltd(PHL.AX)
Pearl Healthcare Limited, together with its subsidiaries, operates a network of dental laboratories that offer various products and services for dental professionals and their patients in Australia. It offers bridges, crowns, chrome castings, dental implants, acrylic products, prosthetics, orthodontics, and sleep appliances. The company operates approximately 11 laboratories. Pearl Healthcare Limited is headquartered in Fitzroy, Australia.
Top Stocks To Invest In: ABAXIS Inc.(ABAX)
Abaxis, Inc. develops, manufactures, markets, and sells portable blood analysis systems for use in veterinary or human patient-care setting to provide blood constituent measurements for clinicians worldwide. The company offers point-of-care blood chemistry analyzer, which consists of a compact portable analyzer and a series of single-use plastic discs, called reagent discs, containing all the chemicals required to perform a panel of up to 14 tests on human patients and 13 tests on veterinary patients. It markets the blood analysis system under the Piccolo Xpress and Piccolo Classic names in the medical market; and under the VetScan VS2 and VetScan Classic names in the veterinary market. The company also provides VetScan HM5, VetScan HM2, VetScan HMII, and VetScan HMT hematology instruments for veterinary applications. In addition, its products include VetScan VSpro, which assists in the diagnosis and evaluation of suspected bleeding disorders, toxicity/poisoning, evaluatio n of disseminated intravascular coagulation, hepatic disease, monitoring therapy, and the progression of disease states. Further, the company offers VetScan VSpro fibrinogen test to provide in-vitro determination of fibrinogen levels in equine platelet poor plasma from a citrated stabilized whole blood sample; and i-STAT 1 that delivers blood gas, electrolyte, basic blood chemistry, and hematology results. Additionally, its products comprise Canine Heartworm Rapid Test to detect dirofilaria immitis in canine whole blood, serum, or plasma; Canine Parvovirus Rapid Test Kit to detect canine parvovirus antigen in feces; and VetScan Giardia Rapid Test to detect giardiasis, a gastrointestinal infection caused by the protozoan parasite Giardia. Abaxis sells its products through direct sales force and independent distributors. The company was founded in 1989 and is headquartered in Union City, California.
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