Kyndryl Stock: Strong Cash Flow Poised for a Re-Rating

Kyndryl Stock: Strong Cash Flow Poised for a Re-Rating?

We think Kyndryl (KD) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

The stock is available at a significant discount to its 3-month, 1-year, and 2-year highs.

KD Has Strong Fundamentals

• Cash Yield: Kyndryl offers an impressive cash flow yield of 9.1%.
• Growing: Revenue growth of 0.1% over the last twelve months is not that great, but your cash pile is likely to grow.
• Valuation Discount: KD stock is currently trading at 43% below its 3-month high, 67% below its 1-year high, and 67% below its 2-year high.

Below is a quick comparison of KD fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While KD stock may be a compelling investment opportunity, it's always helpful to be aware of a stock's history of drawdown. KD fell nearly 80% during the Inflation Shock. That's a steep drop, even with any positives in the background. It shows how vulnerable the stock can be when markets turn. Good fundamentals matter, but in a selloff, losses can get brutal fast. This kind of volatility means risk is real, no matter how solid things look on paper. But the risk is not limited to major market crashes. Stocks fall even when markets are good - think events like earnings, business updates, and outlook changes. Read KD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell KD Stock.

Other Stocks Like KD

Not ready to act on KD? You could consider these alternatives:

1. Accenture (ACN)
2. Intuit (INTU)
3. Boston Scientific (BSX)

These stocks have positive revenue growth, high free cash flow yield, and are trading at a meaningful discount to 3M, 1Y, and 2Y highs.

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 25.7% and 57.9% respectively, with win rate (percentage of picks returning positive) of above 70%.

Portfolios Over Individual Stock Picks

Individual stocks are unpredictable. A smart portfolio helps you invest, limits downside shocks, and provides upside exposure.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 - the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.