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Companies with Three Great Qualities

Finding firms with solid cash flows, stock buybacks, and cheap stocks.

If Grandma had a recipe for a great stock investment, it might go something like this: Start with a company that generates lots of cash and does so consistently. Then, throw in a management team that does good things with that cash, such as buy back shares. And finally, toss in a stock that's priced cheaply relative to those cash flows.

What happens if we take that recipe and run it through Morningstar's  Premium Stock Selector? To find out, I constructed the following screen: