Why "Free Cash Flow" is Important

I will start by saying that COG and QQQG are the exact same strategy just with a different indicy.

So, Pacer uh has a a series of funds that all kind of follow this cash cow idea that uh and they really on their website break it down why free cash flow matters and why they think it is a attribute of companies that will outperform and they do an excellent job on their website of doing that.

But essentially what it says is that companies that have uh above average free cash flow uh positive free cash flow perform better over time uh and they tend to have higher growth rates as a result because they can maintain and invest at times where companies without free cash flow uh cannot.

As a matter of fact, when people talk about value stocks, they talk a lot about using PE as their valuation metrics uh to decide, you know, what to um invest in.

If you're looking at growth stocks, you want to look at price to free cash flow.

And that is actually uh the valuation metric that you want to look at to determine, you know, the valuation um comparability, discount, premium versus peers.

Uh when you're looking at a growth stock,