Great article. Sometimes (maybe most of the times) low growth, high fcf yield cos simply accumulate cash on their B.s and don’t pay out as dividends. Would u classify those as value traps or what’s ur thought on them
It think it depends on the quality of the business and management's ability to effectively invest that money (track record). Keeping the money in the company could allow the company to opportunistically invest it. As a shareholder, its definately higher risk though (Cultiba is an example of this).
Here is my view: How Share Buybacks Can Turn Slow-Growing Stocks Into Strong Investmentshttps://dividends4me.substack.com/p/how-share-buybacks-can-turn-slow
Great article. Sometimes (maybe most of the times) low growth, high fcf yield cos simply accumulate cash on their B.s and don’t pay out as dividends. Would u classify those as value traps or what’s ur thought on them
It think it depends on the quality of the business and management's ability to effectively invest that money (track record). Keeping the money in the company could allow the company to opportunistically invest it. As a shareholder, its definately higher risk though (Cultiba is an example of this).
You are talking about CROIC:
CROIC = ROIC × Earnings Quality
Here is my view: How Share Buybacks Can Turn Slow-Growing Stocks Into Strong Investmentshttps://dividends4me.substack.com/p/how-share-buybacks-can-turn-slow