Course 406: Slow-Growth Stocks
Does the Company Generate a Dependable Stream of Free Cash Flow?
In this course
1 Introduction
2 How Fast Is the Company Growing?
3 How Consistently Is the Company Growing?
4 Does the Company Generate a Dependable Stream of Free Cash Flow?
5 What's the Company Doing with Its Money?
6 What's the Return on Capital?
7 How Has the Stock Performed?
8 Is the Stock Priced Like a Slow Grower?
9 Conclusion: What Do I Get in Return?

In addition to providing a steady record of growth, Procter & Gamble is a cash cow. The company consistently generates high free cash flows, sometimes (as in 1997) even surpassing its reported net income. Typically, with a slow-growing company, especially for a mature giant such as Procter & Gamble, the more free cash flow the better. A slow grower with negative free cash flows can become (or already is) a money pit, plowing more money into the business than the business is generating. Capital-intensive industries, such as steel and autos, are filled with such money pits. Procter & Gamble, by contrast, is producing real profit for its shareholders, and a lot of it.

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