Had Jerry Maguire been an investor instead of a fictional sports agent, he might have become famous for yelling, "Show me the cash flow!"

Earnings come and go, and the green-eyeshade types can legally manipulate them to mask a company's true operations. Yet the ability to generate cash -- that delightful stuff that comes in the register and goes out the door -- remains the preeminent indicator of a company's worth. In short, cash is king.

Below, we'll look at companies that have proven themselves prodigious generators of free cash flow (FCF) -- the amount of money a company has left over that it could potentially pay to its investors. We'll find companies that have generated compounded free cash flow growth rates exceeding 25% annually over the past five years, then pair them with the opinions of the more than 125,000 members of the Motley Fool CAPS investor-intelligence community to see which ones might have the best chance of outperforming the market.

Over the first 20 months since CAPS began tracking the data, four-star stocks have outperformed the market by more than seven percentage points, while five-star stocks did even better. Keeping an eye on these top stocks might signal your best opportunity to capture those gains.

Company

Levered FCF 5-Year CAGR

CAPS Rating (out of 5)

Burlington Northern Santa Fe (NYSE:BNI)

60.2%

*****

InterDigital (NASDAQ:IDCC)

59.7%

****

Cliffs Natural Resources (NYSE:CLF)

57.8%

****

Genentech (NYSE:DNA)

55.9%

****

Netflix (NASDAQ:NFLX)

44.2%

***

Sources: Capital IQ, a division of Standard & Poor's; Motley Fool CAPS.
CAGR = compounded annual growth rate.

Generating copious amounts of cash doesn't make a company an automatic buy. But having looked at Enron's cash flows instead of its earnings would have saved many investors a lot of grief. Warren Buffett understands that the value of a company today is calculated by its discounted future cash flows, so use this list as a jumping-off point to dig deeper into the piles of cash.

Ka-ching!
Back in July, Swiss pharmaceutical giant Roche bid $44 billion, or $89 a share, for the portion of U.S. biotech Genentech it didn't already own, an offer that Genentech politely refused as too low. Many biotechs felt the same way back then; ImClone Systems, for example, initially rejected an offer from Bristol-Myers Squibb (NYSE:BMY) that was 30% higher than where the stock had been trading.

Earlier this month, however, Genentech's stock had fallen to $71 a share as concern over whether Roche could secure the necessary financing reached its nadir. Top-rated CAPS All-Star bclan13 thinks the deal is still worthwhile to both parties, and there's been a flurry of speculation that the deal may yet go through, spurring Genentech's shares to rise above $80 again. bclan13 writes: "Genentech/Roche have a leading understanding of angiogenesis and are consolidating anti-angiogenesis IP / molecules. It is worth it to Roche to make this deal."

Ring the register
Warren Buffett is riding the rails these days -- his Berkshire Hathaway (NYSE:BRK-A) now holds a 20% position in Burlington Northern Santa Fe. CAPS member Vanheezy18 says he's also buying a basket of railroad stocks, since he considers them better-positioned than the trucking industry in this difficult climate:

I'm playing Monopoly in real life (kinda). As a young investor I'm buying 4 railroads and holding until i can buy other "properties". [CSX, Norfolk Southern, Burlington Northern, and Union Pacific] basically hold a oligopoly on American Railways--making 80% of the total railway profit. Whereas the economy will temporarily hurt, railways are better positioned to weather the storm than trucking, which means when the market rises, railways will have even more business and more profit. (Disclaimer: A Long Term Play being made by a 22 year old)

Follow the money
While these stocks have left a trail of dollars, it pays to start your own research on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to the completely free CAPS service and let us hear what you've got to say about these, or any other stocks that you think will continue to be rolling in the dough.

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