3 More Kings of Cash

Close your eyes, Fool. Imagine that you're a billionaire financier with enough money to fund a takeover of any company of your choice (hostile or otherwise!). What exactly would you be thinking about? What would you be your main concerns? What type of things would you be looking for?

I've had this dream many times, and more often than not, my main objective would be to get back, preserve, and then grow exactly what was needed to buy the business in the first place -- cash.

A Fool's guide to free cash
Investing, after all, is about putting money up front today to get more of it in return tomorrow. Here at the Fool, we're firm believers that free cash flow, as opposed to traditional accounting earnings, is the best gauge of a firm's profitability (or lack thereof). You can learn more about the importance of free cash flow here.

So with those cash flow lessons deeply ingrained in your Foolish subconscious -- or maybe just bookmarked as a "favorites" page -- I'll highlight three cash-cow favorites of our Motley Fool CAPS community.

I'll simply screen for companies with free cash flow-to-sales margins above 15% (also known as the Cash King Margin) that our community is overwhelmingly bullish about as well. The Cash King Margin is a good way to account for size differences among companies, rather than just using an absolute level of free cash flow.

Cash Kings rule
Unlike a company such as Syntroleum Corp. (NASDAQ:SYNM), which has cash gushing out of its corporate windows, these companies have it practically flooding the mailrooms.

So let's not waste another second. Sound the trumpets! Here's another trio of cash kings from CAPS:

As always, don't consider these stocks as formal picks, but rather as suggestions worth further investigation. After all, due diligence is the Fool's way to riches.

But just for starters, here's a quick summary of the stories behind these cash-throwing kings, and how some of our CAPS players feel about them.

Ruling like Robin Hood
With a whopping free cash flow-to-sales margin of more than 25%, Blackbaud takes the honors as this week's most prolific cash king. As the world's leading provider of software designed specifically for nonprofit organizations, Blackbaud has the dominant market share, unique service solutions, and well-entrenched nonprofit niche to keep its fortress flush with cash.

There are an estimated half-billion nonprofit organizations around the world, and just a tiny fraction of them are Blackbaud customers, leading CAPS player eggmanisi to trumpet the company's growth opportunities:

"BLKB is well managed and positioned in its niche market -- providing software and services for non-profit organizations. The increasing demand in this growing market bodes well for the long-term prospects of Blackbaud."

The sultan of Shrek
DreamWorks Animation is a free cash-flowing ruler that uses imagination, computer-generated images (CGI), and valuable brands -- such as its wildly popular Shrek franchise -- to hold a leadership position within the animated films space. Specifically, DreamWorks counts on higher production volume than its main competitors, aiming to release a sustained stream of two CGI films per year in order to generate superior returns and free cash flow.

CAPS All-Star prose976 is but one Fool who's animated by an encouraging view of this king's body of work:

"DreamWorks is a pace-setter and groundbreaker, and is limited only by the imaginations of those working with its brand. Its digital/celluloid offerings are right on par with Disney/Pixar. Dreamed up originally by Spielberg and Geffen (and a few others), this is a winning studio/company."

A generic gerent
Our last free cash flow king this week is Abbott Laboratories, one of the fastest-growing, most diversified health-care companies in the world. Abbott's positioning within several health-care growth markets (such as nutritionals, diagnostics, and cardiovascular), combined with a potent new product pipeline, mean this king should be healing the ailing and enriching shareholders for several years to come.

It's that type of growth opportunity that has our CAPS community keeping a close watch on Abbott's health. CAPS All-Star pennysplants believes Abbott is fit for a king:

"Top line growth faster than most any other large cap pharma/healthcare company. Diversified, with growth drivers being 1- Company shifting to higher-growth products, 2- good pipeline of biologics and specialty drugs, and 3- expansion into medical devices and diagnostics. Good global positioning. Low long-term risk."

The Foolish bottom line
Free cash flow-generating companies like Blackbaud, Dreamworks Animation, and Abbott Labs are always among my top candidates for further research. Our Motley Fool CAPS intelligence database is a great place to look for your own cash kings, read what fellow Fools think, and even voice your own opinion about your favorite stocks. Click here to join the forward-thinking CAPS community free of charge.

Be sure to join us next week, when I'll feature three more cash kings from CAPS. Until then, may your free cash flow reign supreme.

Foolish contributor Brian Pacampara is always a billionaire in his dreams and holds no position in any of the companies mentioned. Disney and DreamWorks are Motley Fool Stock Advisor picks. Blackbaud is a Rule Breakers choice. The Fool's disclosure policy is the strict set of rules that always rules Fools.