3 Stocks Generating a Ridiculous Amount of Cash

Core Insights - The ultimate goal of a business is to generate cash for its shareholders, with net income often considered the "bottom line" indicating profit, but it does not always reflect cash flow accurately [1] - Cash flow provides a clearer picture of a company's profitability, allowing for reinvestment or returns to shareholders, with free cash flow being a key metric [2] - Free cash flow yield, which divides free cash flow by market capitalization, helps investors assess a firm's ability to reinvest or pay dividends relative to its size [3] Company Summaries - Reinsurance Group of America (RGA): - RGA has a free cash flow yield of 60%, indicating that its free cash flow over the last twelve months equaled 60% of its market capitalization [6] - The company specializes in life and health reinsurance, providing insurance to insurance companies, which allows for expanded access to insurance [8] - Capital One Financial (COF): - Capital One has a free cash flow yield of 31%, primarily due to non-cash expenses associated with credit card operations [8] - In the first nine months of 2024, the company reported a net income of $3.6 billion, with free cash flow nearly reaching$15 billion after accounting for provisions for credit losses [9] - Plains GP Holdings (PAGP): - Plains GP has generated a 49% free cash flow yield, with significant non-cash expenses from depreciation and amortization, leading to a free cash flow of $2.1 billion despite a net income of -$206 million [12][13] - The company focuses on acquiring stakes in midstream oil and gas infrastructure, which allows it to maintain cash flow despite negative net income [12][13]