Free Cash Flow Focus: Understanding Low Multiples for SFLO
Thursday, 19 September 2024, 13:28
Free Cash Flow Focus Driving Low Multiples
The VictoryShares Small Cap Free Cash Flow ETF (SFLO) targets profitable, small-cap companies that generate strong free cash flows. This focus has resulted in attractive valuations that resonate with investors looking to capitalize on the small-cap sector.
Attractive Valuations
- Free cash flow indicates how much cash a company generates after capital expenditures.
- Companies with robust free cash flow often enjoy higher valuations despite being small-cap.
- The SFLO ETF leverages these principles to select its holdings.
Why Small-Cap?
1. Growth Potential: Small-cap companies can offer significant upside.
2. Market Inefficiencies: These sectors often lack thorough coverage, creating unique opportunities.
3. Strong fundamentals: The focus on free cash flow ensures a solid financial foundation.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.