Last updated: July 2026
Most investors chase earnings. But earnings can lie. Free cash flow does not.
In a 40-year study of every major valuation ratio, Alpha Architect found that Free Cash Flow Yield ranked as the second-best way to find undervalued stocks — delivering 16.6% average annual returns from 1971 to 2010. Only EBITDA/EV ranked higher, at 17.7%.
That 1.1% gap is worth understanding. EBITDA excludes depreciation and amortisation — but those are real costs for any business that needs physical assets to operate. A factory, a fleet of vehicles, a pipeline: the wear on those assets is a genuine expense. FCF yield accounts for it directly by deducting capital expenditure from operating cash flow. This makes FCF yield the more conservative and reliable measure for most industries, and the reason many practitioners prefer it over EBITDA/EV despite the small return difference.
Our own 12-year European back test confirmed the finding: the top 20% of companies ranked by FCF yield returned 248.7% versus 30.5% for the market over the same period. And when combined with 12-month price momentum, that rose to 755% — more than double the standalone strategy.
In this post, you will learn why free cash flow yield works, how you can find ideas fast, and how to use two proven versions of the strategy. You will also get over 90 high free cash flow investment ideas and see how you can use a repeatable screen to find your own high free cash flow ideas with a few mouse clicks.
With the Quant Investing screener, you can set this up, so you get high free cash flow ideas that exactly fit your requirements in your inbox without even having to log into the screener.
To make sure we are talking about the same ratio first a definition:
Free Cash Flow Yield definition: Free Cash Flow Yield = Free Cash Flow ÷ Enterprise Value. Free Cash Flow is cash from operations minus capital expenditure. Enterprise Value is market capitalisation plus long-term debt plus minority interest plus preferred capital minus excess cash. A higher FCF yield indicates a cheaper, more cash-generative company relative to its total value.
Key findings from the research:
- FCF yield ranked second-best of all valuation ratios in a 40-year US study (16.6% average annual return vs 17.7% for EBITDA/EV best)
- Top 20% FCF yield companies in Europe returned 248.7% over 12 years versus 30.5% for the market
- Combined with 12-month price momentum, FCF yield produced +755% over 12 years — more than double the standalone strategy
- Results confirmed in both US (1971–2010) and European markets (1999–2011)
This article is general research for a broad audience, not personalised investment advice. The returns shown are back-tested group averages across many holdings, not individual stock picks or a forecast. Past performance is not a guarantee and share prices can fall as well as rise.
Why Free Cash Flow Yield Is a Great Investment Strategy
Free Cash Flow is the cash a business has left after it pays for what it needs to run, to maintain and grow the business. In the Quant Investing stock screener, Free Cash Flow (FCF) is defined as total cash from operations minus capital expenditure.
Free Cash Flow Yield tells you how much free cash flow you get compared to the full price of the business. In the screener, Free Cash Flow Yield is defined as Free Cash Flow divided by Enterprise Value. Enterprise Value is market cap plus long-term debt plus minority interest plus preferred capital minus excess cash.
As you can see, it is a clean way to find companies that have enough cash to pay dividends and do buybacks. It lets you avoid stocks that only “look cheap” because earnings are high for one year, but the business generated no cash because accounts receivable increased substantially, for example – never a good sign.
Does Free Cash Flow Yield Investing Work
Before you start using the strategy, you should ask one question. Does the strategy work over long periods across different world markets? If it does, you have an advantage.
The reason free cash flow yield investing works is simple. Investors often overpay for growth and exciting stories. They ignore boring, high cash generating companies. Free cash flow yield gives you investment ideas in this ignored group.
It also forces you to be disciplined. You are not buying what feels good today. You are buying what is cheap compared to cash.
FCF Yield Backtest in the USA
Alpha Architect tested all valuation ratios and found FCF Yield to be one of the best. Their 40-year study of valuation ratios was a quest to find the Holy Grail of investing metrics.
Free Cash Flow Yield emerged as one of the best, second only to EBITDA/EV.
They tested 5 ratios over the 40-year period from 1 July 1971 to 31 December 2010 and tested normalised (average) ratios to see if they increase returns.
What ratios did they test?
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Earnings to Market Value (E/M) – You can also call the ratio Earnings to Price – the inverse of the PE ratio
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Earnings before interest, taxes, depreciation, and amortization to total enterprise value (EBITDA/TEV)
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Free cash flow to total enterprise value (FCF/TEV) – FCF was defined as Net Income + Depreciation and Amortization - Working Capital Change - Capital Expenditures
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Gross profits to total enterprise value (GP/TEV)
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Book to market(B/M) – the inverse of Price to Book
Companies included and how they tested
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This back test excluded financial companies and utilities, and the smallest 10% of market value companies listed on the NYSE.
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Portfolios were put together on 30 June each year when all the companies were sorted into five quintiles, 20% groups of companies.
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They only included companies for which 8 years of data were available.
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Portfolios were rebalanced on a yearly basis.
How the ratios were calculated
For the one-year (1yr) ratios, companies were selected based on the current numerator (top value) and current denominator (bottom value) for each measure.
For all the normalized ratios (2 years – 8 years) they used the average of the numerator over the past 2 to 8 years and divided this average by the current denominator.
For example, the 8-year FCF/EV ratio was calculated using the average of the past 8 years FCF for each company (including the current year) and dividing this by the company’s current total enterprise value (EV).
This is what they found:
| Equal Weight Value | ||||||||
| 1yr | 2yr | 3yr | 4yr | 5yr | 6yr | 7yr | 8yr | |
| PE | 16.0% | 15.7% | 16.1% | 16.2% | 15.7% | 15.6% | 15.7% | 15.8% |
| EBITDA/EV | 17.7% | 17.3% | 17.4% | 16.9% | 16.8% | 16.7% | 16.5% | 16.5% |
| FCF/EV | 16.6% | 16.0% | 15.9% | 15.9% | 15.8% | 15.5% | 14.9% | 15.1% |
| Gross Profits/EV | 16.5% | 16.7% | 16.7% | 16.7% | 16.6% | 16.4% | 16.7% | 16.6% |
| Book/Market | 15.0% | 15.5% | 15.5% | 15.4% | 15.4% | 15.3% | 15.6% | 15.6% |
| Equal Weight Growth | ||||||||
| PE | 10.4% | 10.6% | 10.2% | 10.3% | 9.9% | 10.0% | 9.9% | 9.7% |
| EBITDA/EV | 8.0% | 7.7% | 7.4% | 7.3% | 7.3% | 7.3% | 7.3% | 7.1% |
| FCF/EV | 11.0% | 11.4% | 11.2% | 11.5% | 11.3% | 11.6% | 11.9% | 11.9% |
| Gross Profits/EV | 8.3% | 8.1% | 8.1% | 8.1% | 8.2% | 8.1% | 8.2% | 8.4% |
| Book/Market | 9.2% | 8.7% | 8.1% | 8.0% | 8.0% | 8.0% | 8.1% | 8.1% |
| Spread (Value-Growth) | ||||||||
| PE | 5.5% | 5.2% | 5.9% | 5.9% | 5.8% | 5.6% | 5.8% | 6.1% |
| EBITDA/EV | 9.7% | 9.6% | 10.0% | 9.6% | 9.5% | 9.4% | 9.2% | 9.4% |
| FCF/EV | 5.5% | 4.7% | 4.7% | 4.4% | 4.5% | 4.0% | 3.0% | 3.2% |
| Gross Profits/EV | 8.2% | 8.6% | 8.6% | 8.5% | 8.4% | 8.4% | 8.5% | 8.3% |
| Book/Market | 5.8% | 6.8% | 7.5% | 7.4% | 7.4% | 7.3% | 7.5% | 7.5% |
Source: Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years.
The Equal Weight Value part of the table shows the equal-weighted returns of the most undervalued (cheap) 20% of companies based on each valuation ratio.
The Equal Weight Growth part of the table shows the equal-weighted returns of the most overvalued (expensive) 20% of companies based on each valuation ratio..
The Spread (Value-Growth) part of the table shows the difference between the Equal Weight Value and Equal Weight Growth returns of the two above tables.
What they found
As you can see (look at the dark green areas of the table) they did not find that using normalised ratios can add to your returns. Only a normalised book-to-market (inverse of price-to-book) would have given you slightly higher returns compared to the one-year ratio.
The best valuation ratio they found was trailing 1 year EBITDA to EV, with an average return of 17.7% over the 40-year test period.
EBITDA to EV was also the ratio with the highest spread (Value – Growth) returns, which is a further indicator that it is the best ratio to use.
What about free cash flow yield? - Second-best ratio
As you can see free cash flow yield was the second-best ratio they tested, at 16.6% (look at 1-year equal weight) it was 1.1% per year lower than EBITDA/EV.
Still a great return!
FCF yield vs P/E ratio — The P/E ratio uses market capitalisation and accounting earnings. FCF yield uses enterprise value — which adds debt and subtracts cash — and real cash flow. That makes it both more complete (it accounts for how a company is financed) and harder to game. In 40 years of US data, FCF yield beat earnings-to-price by roughly 2–3% a year.
FCF yield vs EBITDA/EV — EBITDA/EV was the single best ratio in the 40-year study at 17.7% a year, just ahead of FCF yield at 16.6%. But EBITDA adds back depreciation and amortisation — real costs for any business that needs physical assets. FCF yield deducts capital expenditure directly, so for asset-heavy industries it is the more conservative, reliable measure. Many practitioners prefer it despite the 1.1% gap.
Key research findings in summary:
- FCF yield ranked second of all valuation ratios in a 40-year US study — 16.6% average annual return versus 17.7% for EBITDA/EV (best)
- Top 20% FCF yield companies in Europe returned 248.7% over 12 years versus 30.5% for the market
- Combined with 12-month price momentum, FCF yield produced +755% over 12 years — more than double the standalone strategy
- Results confirmed in both US (1971–2010) and European markets (1999–2011)
FCF Yield Backtested in Europe
We tested FCF Yield in Europe and found that no matter where you look, high Free Cash Flow Yield companies consistently had great returns.
In our book Quantitative Value Investing in Europe: What Works for Achieving Alpha we tested 168 investment strategies in Europe over the 12 year period from June 1999 to June 2011 we also tested 12 months Free Cash Flow yield and 5 year average free cash flow yield.
Free cash flow yield vs Normalised free cash flow yield
In the back test, free cash flow yield was defined as cash flow from operations minus capital expenditure, divided by enterprise value.
This is what we found:
| Strategy | Free Cash Flow Yield - Trailing 12 Months | |||||
| Total Return 13/06/1999-13/06/2011 | Difference | |||||
| Market Cap | Q1 | Q2 | Q3 | Q4 | Q5 | Q1 - Q5 |
| SMALL CAP (> 15 m and < 100m) | 186.0% | 69.5% | 1.8% | -18.3% | -51.8% | 237.8% |
| MID CAP (> 100 m and < 1000 m) | 317.4% | 107.9% | 16.1% | -14.1% | -6.3% | 323.7% |
| LARGE CAP (> 1000 m) | 242.8% | 147.7% | 59.8% | -1.8% | 30.7% | 212.0% |
| Average | 248.7% | 108.4% | 25.9% | -11.4% | -9.1% | 257.8% |
Free Cash Flow Yield Trailing 12 months returns (Source: Quantitative Value Investing in Europe: What Works for Achieving Alpha)
Q1 (Quintile 1) represents the cheapest 20% of companies and Q5 (quintile 5) the most expensive.
As you can see, buying the most undervalued FCF yield companies (Q1) gave you by far the best performance, for small mid and large companies.
Substantial market outperformance
Just in case you were wondering - market outperformance was substantial, over the 12-year period of the study, the market portfolio generated a return of only 30.5 % or 2.25% pa, dividends included.
How To Improve the Returns of a High Free Cash Flow Yield Investment Strategy
In the above research report, we not only tested single valuation ratios, but we also tested how you can improve returns by combining free cash flow yield with other ratios.
Improve Your Free Cash Flow Yield Returns
The following table shows you the returns you could have achieved if you could combine high 12-month (or TTM) free cash flow yield companies with 14 other ratios and indicators.
| Strategy Factor 1 | Free Cash Flow Yield (Last 12 months) | ||||
| Total Return 13/06/1999-13/06/2011 | |||||
| Factor 2 | Q1 | Q2 | Q3 | Q4 | Q5 |
| Earnings Yield 12 months | 607.9% | 323.5% | 281.9% | 260.9% | 122.8% |
| Earnings Yield 5 years | 428.7% | 438.0% | 382.4% | 122.2% | 209.2% |
| Price To Book | 713.7% | 372.5% | 324.6% | 179.8% | 114.4% |
| FCF Yield | 313.0% | 421.6% | 297.6% | 300.1% | 192.9% |
| FCF Yield 5 years | 322.7% | 414.8% | 356.5% | 292.8% | 160.9% |
| Price To Sales | 549.0% | 326.3% | 275.9% | 298.1% | 119.0% |
| F SCORE | 568.7% | 389.3% | 250.9% | 260.5% | 127.9% |
| Net Debt On Market Value | 231.7% | 270.1% | 374.2% | 292.1% | 339.5% |
| ROIC | 199.1% | 437.5% | 446.4% | 320.6% | 145.1% |
| ROIC 5 years | 334.4% | 358.8% | 359.0% | 375.1% | 221.1% |
| Price Index 12 months | 755.0% | 411.9% | 367.3% | 242.3% | 5.3% |
| Price Index 6 months | 582.8% | 525.7% | 352.8% | 199.7% | 35.0% |
| MF Rank | 389.3% | 341.3% | 348.9% | 311.2% | 142.0% |
| ERP5 | 578.4% | 339.3% | 351.4% | 141.9% | 186.2% |
Source: Quantitative Value Investing in Europe: What works for achieving alpha
Look At Column Q1
Look at the returns in column Q1, it shows the returns generated by first selecting the 20% best free cash flow yield companies combined with the ratios in the column called Factor 2.
Best Combination +755% Was Momentum (506.3% Improvement)
As you can see, when combined with Price Index Momentum (12 months), it works even better, delivering greatly improved returns. +755% total return, more than double what Free Cash Flow Yield alone achieved.
Price index 12 months is calculated as the current share price / share price 12 months ago.
This means if you invested only in the 20% of high free cash flow yield companies that also had the top 20% 12 months price increase (price index) you could have increased your return by 506.3% (755.0% - 248.7%) compared to if you only invested in companies with the highest free cash flow yield.
That is an improvement of just over 2 times the original return!
See the stocks this FCF yield strategy picked a year ago
Your free demo loads Free Cash Flow Yield and Price Index 12 months as pre-built ranking factors across 22,000+ companies worldwide. Sort by FCF yield, add the 12-month momentum filter to mirror the +755% combination above, and the names at the top are the companies the strategy would have picked twelve months ago — the demo runs on data from a year ago. Look up today's prices on any five of them and you have run a real one-year forward test of the strategy in five minutes, no back-test software needed.
No credit card needed. Cancels automatically after 30 days.
Best High Free Cash Flow Yield Investment Ideas for 2026
In this section, we show you actionable investment ideas. You will see two lists of investment ideas:
1. One is a “stand-alone” high free cash flow yield investment idea.
2. The other is free cash flow yield plus 12-month momentum (Price Index 12 months).
In the list, you will see some extreme yields. Those can be outliers. The goal is not to find the highest number. The goal is to find cash-rich companies that are also investable.
Best High Free Cash Flow Yield Investment Ideas Worldwide For 2026
High Free Cash Flow Yield investment ideas
This is what the screen looked like:
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All countries worldwide included
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Free Cash Flow Yield from undervalued to expensive
There were some wild numbers (most likely outliers) that ranked best so I went down the list a bit to show you companies with more realistic Free cash flow yields.
| Name | Country | FCF Yield |
|---|---|---|
| Motonic Corporation | South Korea | 2752642600% |
| It'S Hanbul Co., Ltd. | South Korea | 2590183100% |
| Samyoung Electronics Co., Ltd | South Korea | 2092024900% |
| Seoul City Gas Co., Ltd. | South Korea | 1830923500% |
| Iljin Diamond Co.,Ltd | South Korea | 1406554900% |
| Yiren Digital Ltd. | China | 124823900% |
| China Dongxiang (Group) Co., Ltd. | China | 9953800% |
| Keros Therapeutics, Inc. | USA | 8708300% |
| Ubiquoss Holdings Inc. | South Korea | 10555% |
| Daewon Sanup Co., Ltd | South Korea | 198% |
| Rajesh Exports Limited | India | 147% |
| Shinko Shoji Co., Ltd. | Japan | 128% |
| BB Biotech AG | Switzerland | 122% |
| Magazine Luiza S.A. | Brazil | 111% |
| DoubleDown Interactive Co., Ltd. | South Korea | 105% |
| Ubiquoss Inc. | South Korea | 104% |
| Huuuge, Inc. | USA | 96% |
| Mammoth Energy Services, Inc. | USA | 88% |
| Imperial Petroleum Inc. | Greece | 84% |
| Grupo Casas Bahia S.A. | Brazil | 79% |
Source: Quant Investing Stock Screener
Free Cash Flow Yield combined with Price Index 12 month
This is what the screen looked like:
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All countries worldwide included
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Price Index 12 months (Momentum) from best to worse
| Name | Country | FCF Yield | Price Index 12m |
|---|---|---|---|
| eole Inc. | Japan | 8.5% | 9.6 |
| Resolute Holdings Management, Inc. | USA | 8.6% | 7.2 |
| ITCENGLOBAL CO., Ltd. | South Korea | 9.0% | 7.0 |
| Opendoor Technologies Inc. | USA | 12.3% | 4.6 |
| Village Farms International, Inc. | USA | 16.7% | 4.5 |
| Thor Explorations Ltd. | Canada | 17.4% | 4.4 |
| Monte Rosa Therapeutics, Inc. | USA | 8.6% | 4.4 |
| Nutex Health Inc. | USA | 12.9% | 3.9 |
| Saniona AB (publ) | Denmark | 21.6% | 3.6 |
| Cogna Educação S.A. | Brazil | 7.4% | 3.6 |
| Monument Mining Limited | Canada | 18.5% | 3.6 |
| Naikai Zosen Corporation | Japan | 16.2% | 3.6 |
| Cheffelo AB (publ) | Sweden | 7.9% | 3.5 |
| Hyosung Corporation | South Korea | 6.6% | 3.3 |
| Nihon Seiko Co., Ltd. | Japan | 7.1% | 3.3 |
| Techno Ryowa Ltd. | Japan | 10.4% | 3.2 |
| Cantargia AB (publ) | Sweden | 15.3% | 3.1 |
| HD Hyundai Co., Ltd. | South Korea | 15.0% | 3.1 |
| NITTAN Corporation | Japan | 7.3% | 3.0 |
| BHI Co., Ltd. | South Korea | 7.3% | 3.0 |
Source: Quant Investing Stock Screener
Best High Free Cash Flow Yield Investment Ideas in North America for 2026
High Free Cash Flow Yield investment ideas
This is what the screen looked like:
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USA and Canada selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Free Cash Flow Yield from undervalued to expensive
| Name | Country | FCF Yield |
|---|---|---|
| Keros Therapeutics, Inc. | USA | 8708300% |
| Huuuge, Inc. | USA | 96% |
| Mammoth Energy Services, Inc. | USA | 88% |
| Saturn Oil & Gas Inc. | Canada | 49% |
| Cal-Maine Foods, Inc. | USA | 44% |
| Black Diamond Therapeutics, Inc. | USA | 39% |
| Expensify, Inc. | USA | 32% |
| United States Oil Fund, LP | USA | 30% |
| Bread Financial Holdings, Inc. | USA | 29% |
| RE/MAX Holdings, Inc. | USA | 27% |
| Canada Packers Inc. | Canada | 27% |
| G-III Apparel Group, Ltd. | USA | 27% |
| Universal Insurance Holdings, Inc. | USA | 27% |
| PetroTal Corp. | USA | 26% |
| Gold.com, Inc. | USA | 25% |
| Everest Group, Ltd. | USA | 25% |
| Hurco Companies, Inc. | USA | 24% |
| Cross Country Healthcare, Inc. | USA | 24% |
| Cricut, Inc. | USA | 24% |
| Seneca Foods Corporation | USA | 23% |
Source: Quant Investing Stock Screener
Free Cash Flow Yield combined with Price Index 12 month
This is what the screen looked like:
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USA and Canada selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Price Index 12 months (Momentum) from best to worse
| Name | Country | FCF Yield | Price Index 12m |
|---|---|---|---|
| Resolute Holdings Management, Inc. | USA | 8.6% | 7.2 |
| Opendoor Technologies Inc. | USA | 12.3% | 4.6 |
| Village Farms International, Inc. | USA | 16.7% | 4.5 |
| Thor Explorations Ltd. | Canada | 17.4% | 4.4 |
| Monte Rosa Therapeutics, Inc. | USA | 8.6% | 4.4 |
| OceanaGold Corporation | Canada | 5.3% | 3.9 |
| Nutex Health Inc. | USA | 12.9% | 3.9 |
| Monument Mining Limited | Canada | 18.5% | 3.6 |
| Empress Royalty Corp. | Canada | 6.1% | 3.4 |
| DPM Metals Inc. | Canada | 6.0% | 3.4 |
| The Arena Group Holdings, Inc. | USA | 5.9% | 3.2 |
| Mako Mining Corp. | Canada | 5.3% | 2.9 |
| Tutor Perini Corporation | USA | 17.7% | 2.8 |
| Contango Ore, Inc. | USA | 10.3% | 2.8 |
| BK Technologies Corporation | USA | 5.9% | 2.7 |
| Herbalife Ltd. | USA | 5.5% | 2.7 |
| Orla Mining Ltd. | Canada | 9.9% | 2.6 |
| Fortuna Mining Corp. | Canada | 7.1% | 2.4 |
| Pagaya Technologies Ltd. | USA | 10.1% | 2.4 |
| Puma Biotechnology, Inc. | USA | 11.0% | 2.3 |
Source: Quant Investing Stock Screener
Run this FCF yield screen on live data
The tables above are a point-in-time snapshot. With a subscription you run the same screen yourself — top 20% FCF yield, sorted by 12-month momentum, filtered to any region — on live data updated daily, and get automatic email alerts when a new company enters your screen so you never miss one as it appears.
100% money-back guarantee for the first 30 days. No long-term contract.
Best High Free Cash Flow Yield Investment Ideas in Europe for 2026
High Free Cash Flow Yield investment ideas
This is what the screen looked like:
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EU countries, Scandinavia and the UK selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Free Cash Flow Yield from undervalued to expensive
| Name | Country | FCF Yield |
|---|---|---|
| BB Biotech AG | Switzerland | 122% |
| Imperial Petroleum Inc. | Greece | 84% |
| Grupa Azoty S.A. | Poland | 64% |
| Wise plc | Great Britain | 52% |
| Catella AB (publ) | Sweden | 52% |
| Zealand Pharma A/S | Denmark | 49% |
| Votum S.A. | Poland | 41% |
| Digital Bros S.p.A. | Italy | 32% |
| StealthGas Inc. | Greece | 32% |
| Embracer Group AB (publ) | Sweden | 31% |
| Sea1 Offshore Inc. | Norway | 31% |
| eDreams ODIGEO S.A. | Spain | 30% |
| Kamux Oyj | Finland | 30% |
| Answear.com S.A. | Poland | 29% |
| Frontier Developments plc | Great Britain | 29% |
| Halfords Group plc | Great Britain | 28% |
| HelloFresh SE | Germany | 28% |
| Eolus Aktiebolag (publ) | Sweden | 27% |
| TGS ASA | Norway | 27% |
| ProSiebenSat.1 Media SE | Germany | 26% |
Source: Quant Investing Stock Screener
Free Cash Flow Yield combined with Price Index 12 month
This is what the screen looked like:
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EU countries, Scandinavia and the UK selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Price Index 12 months (Momentum) from best to worse
| Name | Country | FCF Yield | Price Index 12m |
|---|---|---|---|
| Saniona AB (publ) | Denmark | 21.6% | 3.6 |
| Cantargia AB (publ) | Sweden | 15.3% | 3.1 |
| ByggPartner Gruppen AB | Sweden | 8.4% | 2.9 |
| Polimex-Mostostal S.A. | Poland | 18.0% | 2.9 |
| Airtel Africa Plc | Great Britain | 8.5% | 2.8 |
| Verkkokauppa.com Oyj | Finland | 16.2% | 2.7 |
| Serabi Gold plc | Great Britain | 9.6% | 2.6 |
| SMA Solar Technology AG | Germany | 13.4% | 2.4 |
| Tesmec S.p.A. | Italy | 12.7% | 2.4 |
| Asseco Poland S.A. | Poland | 10.1% | 2.2 |
| IHS Holding Limited | Great Britain | 11.8% | 2.2 |
| Axactor ASA | Norway | 18.1% | 2.2 |
| Frontier Developments plc | Great Britain | 28.6% | 2.1 |
| Sonae, SGPS, S.A. | Portugal | 8.0% | 2.0 |
| Orlen S.A. | Poland | 10.0% | 2.0 |
| Viridien Société anonyme | France | 20.7% | 2.0 |
| Comp S.A. | Poland | 8.2% | 2.0 |
| Pepco Group N.V. | Great Britain | 12.4% | 1.9 |
| Vestas Wind Systems A/S | Denmark | 8.8% | 1.9 |
| MBB SE | Germany | 11.6% | 1.9 |
Source: Quant Investing Stock Screener
Best High Free Cash Flow Yield Investment Ideas in Asia for 2026
High Free Cash Flow Yield investment ideas
This is what the screen looked like:
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Australia, China, Hong Kong, Japan, South Korea, New Zealand and Singapore selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Free Cash Flow Yield from undervalued to expensive
| Name | Country | FCF Yield |
|---|---|---|
| Motonic Corporation | South Korea | 2752642600% |
| It'S Hanbul Co., Ltd. | South Korea | 2590183100% |
| Samyoung Electronics Co., Ltd | South Korea | 2092024900% |
| Seoul City Gas Co., Ltd. | South Korea | 1830923500% |
| Iljin Diamond Co.,Ltd | South Korea | 1406554900% |
| Yiren Digital Ltd. | China | 124823900% |
| China Dongxiang (Group) Co., Ltd. | China | 9953800% |
| Ubiquoss Holdings Inc. | South Korea | 10555% |
| Daewon Sanup Co., Ltd | South Korea | 198% |
| Shinko Shoji Co., Ltd. | Japan | 128% |
| DoubleDown Interactive Co., Ltd. | South Korea | 105% |
| Ubiquoss Inc. | South Korea | 104% |
| Sung Woo Co.,Ltd | South Korea | 67% |
| Texwinca Holdings Limited | Hong Kong | 57% |
| FinVolution Group | China | 54% |
| Cape Industries Ltd. | South Korea | 53% |
| Hello Group Inc. | China | 52% |
| Dongyang E&P Inc. | South Korea | 51% |
| Nakano Corporation | Japan | 43% |
| KUMHO Engineering & Construction | South Korea | 42% |
| MAKUS Inc. | South Korea | 42% |
| DY Power Corporation | South Korea | 41% |
| Wonik Pne Co., Ltd. | South Korea | 41% |
| NHN Corporation | South Korea | 40% |
| Japan Cash Machine Co., Ltd. | Japan | 40% |
Source: Quant Investing Stock Screener
Free Cash Flow Yield combined with Price Index 12 month
This is what the screen looked like:
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Australia, China, Hong Kong, Japan, South Korea, New Zealand and Singapore selected
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Top 20% Free Cash Flow Yield companies
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Minimum daily trading volume of $100,000
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Minimum company market value of $100 million
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Financial statements updated in the last 6 months
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Results sorted by Price Index 12 months (Momentum) from best to worse
| Name | Country | FCF Yield | Price Index 12m |
|---|---|---|---|
| eole Inc. | Japan | 8.5% | 9.6 |
| ITCENGLOBAL CO., Ltd. | South Korea | 9.0% | 7.0 |
| Naikai Zosen Corporation | Japan | 16.2% | 3.6 |
| Hyosung Corporation | South Korea | 6.6% | 3.3 |
| Nihon Seiko Co., Ltd. | Japan | 7.1% | 3.3 |
| Techno Ryowa Ltd. | Japan | 10.4% | 3.2 |
| HD Hyundai Co., Ltd. | South Korea | 15.0% | 3.1 |
| NITTAN Corporation | Japan | 7.3% | 3.0 |
| BHI Co., Ltd. | South Korea | 7.3% | 3.0 |
| Daejoo Inc. | South Korea | 7.1% | 2.9 |
| Johnson Electric Holdings Limited | Hong Kong | 8.3% | 2.9 |
| Seoho Electric Co.,Ltd | South Korea | 10.7% | 2.9 |
| Chiyoda Corporation | Japan | 16.9% | 2.8 |
| Aluminum Corporation of China | China | 7.2% | 2.7 |
| DB HiTek CO., LTD. | South Korea | 7.2% | 2.7 |
| GnCenergy Co., Ltd | South Korea | 9.0% | 2.6 |
| Aichi Steel Corporation | Japan | 8.7% | 2.6 |
| SNT Holdings Co., Ltd. | South Korea | 9.1% | 2.6 |
| Low Keng Huat (Singapore) Limited | Singapore | 31.5% | 2.6 |
| Nippi,Incorporated | Japan | 6.8% | 2.5 |
Source: Quant Investing Stock Screener
See the current FCF yield stock ideas for 2026
The stock tables above are a dated snapshot. The live screener covers 22,000+ companies and is updated daily, so with a subscription you can run this exact FCF yield screen any time — across every region in this article — and see the names that qualify now. Access is included with every subscription.
See the current 2026 FCF yield list
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Actionable Investment Ideas You Can Use Right Now (Beginners and Advanced)
If you are a beginner or a more advanced investor, either investment strategies or a combination of the two will give you solid investment ideas.
We recommend you always pick a minimum of 30 to 50 stocks, spread across industries. Include even more stocks if you do not want to do any research on each company.
Keep your minimum size and volume rules to the ones we suggested above or larger. This helps you avoid stocks that can trap you because you cannot sell fast.
Also, set clear risk management rules before you buy. For example, you can use a trailing stop loss rule of 15% or 20% and you can stop buying when markets are in a clear downtrend. Systems like this reduce emotion and reduce stress.
Final thoughts. Your edge in 2026
Free cash flow yield is not magic. But it is one of the best ways to focus on what matters. Real cash. If you build your process around it, you stop reacting to noise. You start making calm, repeatable decisions with a good investment strategy.
Your next step is simple. Run the screen. Save it. Then buy a basket of stocks that fit your rules. You can do this all at once, quarterly or a few each month.
You do not need perfect investment ideas; you need a good process that you can stick to.
As above: general research, not personalised advice — your decisions are your own.
FREQUENTLY ASKED QUESTIONS
1. What is Free Cash Flow Yield, and why should I care about it?
Free Cash Flow Yield = free cash flow ÷ enterprise value — how much real cash a company generates against its full price. It is harder to fake than earnings, which makes it one of the most reliable ways to find undervalued stocks: in a 40-year US study the cheapest 20% by FCF yield returned 16.6% a year versus roughly 7–8% for the market.
2. How does Free Cash Flow Yield help avoid risky stocks?
Earnings can be shaped by accounting choices; cash is harder to manipulate. Screening on FCF yield filters out companies that look cheap on earnings but generate no cash — for example where profit is high only because receivables jumped. In the European test the cheapest FCF-yield quintile (Q1) beat the most expensive (Q5) across small, mid and large caps.
3. Has Free Cash Flow Yield been tested over time?
Yes. It has been tested for over 40 years in the US and 12 years in Europe. In both tests, high Free Cash Flow Yield companies gave great returns. In fact, it was the second-best ratio tested. That gives you confidence that the strategy works across time and countries.
4. Can Free Cash Flow Yield work better if combined with other tools?
Yes. If you combine Free Cash Flow Yield with momentum - buying companies whose share price rose over the last 12 months - you can do even better. In Europe, this combo more than doubled the return of using Free Cash Flow Yield alone.
5. How many stocks should I buy using this strategy?
Buy at least 30 to 50 stocks spread across industries — enough that no single company drives your result. This matters because the returns come from the group: the 16.6% and 248.7% figures are quintile averages of many holdings, not individual picks. Add more names if you would rather not research each one.
6. What should I avoid when using Free Cash Flow Yield?
Avoid chasing the highest yield number — several names in the tables above show FCF yields in the millions of %, which are data outliers, not opportunities. Stick to cash-rich, investable companies with realistic yields (research points to roughly 8–10% and up). And manage risk with rules: a 15% or 20% trailing stop loss, and no new buying in a clear market downtrend.
7. How can I start using this strategy right away?
Run a Free Cash Flow Yield screen — for example the top 20% by FCF yield across 22,000+ companies — then buy a basket of 30 to 50 names spread across industries. With the Quant Investing screener you can save the screen and have new ideas emailed to you. Start small, follow the system, and let the group of holdings do the work, exactly as the 16.6% and 248.7% back-test averages did.
8. What is a good free cash flow yield?
Research shows the top 20% of companies by FCF yield (roughly FCF yields above 8-10% depending on market conditions) consistently outperform. In the 40-year Alpha Architect study, the cheapest 20% of companies by FCF yield returned 16.6% per year versus 7-8% for the market average.
9. Is FCF yield better than P/E ratio?
For most purposes, yes. FCF yield uses enterprise value (which includes debt and cash) rather than just market cap, making it a more complete measure of what you pay. It also uses cash flow rather than earnings, which is harder to manipulate through accounting choices. In 40 years of US data, FCF yield outperformed P/E (earnings-to-price) by approximately 2-3% per year.
10. How do you combine FCF yield with momentum?
First screen for the top 20% of companies by FCF yield. Then sort those companies by 12-month price index (current price divided by price 12 months ago) from highest to lowest. Invest in the top companies by momentum from within that value-filtered list. This combination returned +755% over 12 years in European markets versus +248% for FCF yield alone.
