Sticking With Wells Fargo and Cisco
Legendary investment publisher Porter Stansberry recently opined on his version of what a smart investor looks for, especially in this time of unprecedented monetary accommodation by the Federal Reserve.
"Thus, in my Investment Advisory, we judge companies primarily by how efficiently they produce cash. We're interested in how much cash a company generates per unit of sales. And we're interested in how much of this profit is reinvested into the business (through capital expenditures or acquisitions) versus how much is simply returned to the company's real owners - its shareholders," wrote Stansberry.
Successful investors like Warren Buffett and Stansberry would say something similar to, "And we're very interested in the price per share we have to pay to capture our share of the cash the underlying business is producing."So let's look at the first business I consider a "cash-flow king."
As the late Henny Youngman might have said, "Take Wells Fargo, (WFC) please!" WFC happens to be my single favorite bank and financial company right now, and there are many reasons why.
One is its ability to generate a wonderful amount of cash from continuing operations through an ever-increasing return on invested capital. The one-year chart below is a good illustration of what I'm describing. Few companies do it better than Wells Fargo.
WFC Cash from Operations TTM data by YCharts