WASHINGTON — The Personal Consumption Expenditures price index rose 0.2 percent in July, pushing annual inflation to 3.7 percent and signaling that policymakers still lack confidence in a shift away from restrictive monetary policy.
The S&P 500 closed nearly flat at 7,675.70. The Nasdaq Composite edged lower 0.08 percent to 26,130.20, while the Dow Jones Industrial Average declined 113.52 points, or 0.21 percent, to 53,463.88.
For value investors, the inflation persistence creates opportunity. Companies with low Price-to-Cash Flow ratios—which measure market price against per-share cash generation—trade at discounts to their cash-generating power. A P/CF ratio below peers signals stronger cash generation relative to valuation.
Avnet Inc. (AVT), Arrow Electronics Inc. (ARW), Lifetime Brands Inc. (LCUT), and Invesco Ltd. (IVZ) screen as compelling value candidates under this metric. All four generate robust operating cash flow—earnings adjusted for non-cash charges like depreciation—making them more reliable indicators of financial health than accounting-based earnings. Positive operating cash flow gives management room to service debt, weather downturns, reinvest, or return capital to shareholders.
Avnet and Arrow, in particular, stand out. Both are technology distributors with countercyclical cash flow characteristics and balance sheets positioned to benefit from sustained higher rates. ARW trades at an attractive P/CF multiple while facing recovering demand in chip distribution as the AI infrastructure build accelerates. AVT similarly offers margin expansion upside as its industrial and electronics distribution segments normalize post-pandemic.
Beyond individual stocks, energy stocks and real estate investment trusts provide inflation hedges. REITs have beaten inflation 66 percent of the time with average real returns of 4.6 percent.
Other value screens worth monitoring: Ternium, a Latin American steel producer positioned for demand recovery; and high-earnings-yield names like ARCO, HALO, TX, and ARRY. PENN, GOOS, and HRMY also appear attractive on valuation bases.
Investors should not rely on P/CF alone. Pair it with upward earnings-estimate revisions and free cash flow margin trends to distinguish true value from value traps.
