FOXA Generates Strong Cash So Why Are You Not Considering It?
Here is why we think FOXA is worth a look
- Not many stocks offer free cash flow yield of 9.4%, but FOXA does
- Last 12 month revenue growth of 15.7% and operating margin of 18.4% show good fundamentals
- At PE of 13.6, this combo of cash yield, growth, and margin could get noticed
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
| FOXA | |
|---|---|
| Sector | Communication Services |
| Industry | Broadcasting |
| FCF Yield | 9.4% |
| Revenue Growth LTM | 15.7% |
| Revenue Growth 3YAVG | 5.6% |
| Operating Margins LTM | 19.0% |
| Operating Margins 3YAVG | 18.4% |
| PE Ratio | 13.6 |
Proof That It Works
Here are some stocks that showed strong cash flow yield in mid 2024, and saw strong returns in the subsequent 12 months
- Nutanix Stock To $33?
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- Advanced Micro Devices Stock Drop Looks Sharp, But How Deep Can It Go?
- Would You Still Hold Broadcom Stock If It Fell Another 30%?
- Would You Still Hold Modine Manufacturing Stock If It Fell Another 30%?
- Why Is Lyft Stock Down 16%?
- FFIV gained 70% in a year after showing a 6.9% free cash flow yield
- CSCO had 6.6% yield, and returned 50% in the next 12 months
- PM rose over 85% percent as the market noticed its 5.7% free cash flow yield and good underlying growth
But Consider Risk
That said, FOXA isn’t immune to big drops. It fell 79% during the Global Financial Crisis and 63% in the Dot-Com Bubble. The 2018 correction and Covid sell-off still hit hard, with declines around 41% and 48%. Even the recent inflation shock shaved off about 35%. Strong fundamentals matter, but FOXA shows how volatile stocks can be when markets turn south.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.