Bottomline | Finding value in frothy markets

Cash being supreme for a business, we first sifted the set on cash flow yields—for the past fiscal and the first half of the current fiscal (as cash flows are disclosed only half-yearly). To our surprise, there are a good bunch of companies offering cash yields of over 5-6% on FY23 cash flows and annualized FY24 half-yearly cash flows. Some even offer double-digit yields. Here’s a glimpse of yields on the sifted 15.

If we look at some of these stocks from an FY25 price-to-earnings perspective too, some are not terribly expensive, though the growth question is an important one to factor in before venturing in.

There’s also a margin of safety in many, as they trade a decent discount to their 52-week highs. And that can be comforting to investors wary of catching tops.

The above is just an illustration of one way to go about scouring for value. However, much more homework needs to go into your investment decision and valuations should not be looked at in isolation. Growth prospects, quality of management, brand value and governance standards are just a few of the other aspects that require evaluation before you put your money in a stock. And if you aren’t cut out for this kind of work, speak to your investment advisor or invest in mutual funds.

Happy investing!