5 Stocks Making Cash

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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 its ability to generate cash -- what comes in the register and goes out the door -- remains the preeminent indicator of 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 140,000 members of the Motley Fool CAPS investor-intelligence community, to see which ones might have the best chance of outperforming the market.

Company	Levered FCF 5-Year CAGR	CAPS Rating (Out of 5)
Amazon.com (Nasdaq: AMZN)	47.3%	**
Apollo Group (Nasdaq: APOL)	25.2%	**
Brunswick (NYSE: BC)	34.2%	*
eBay (Nasdaq: EBAY)	30.0%	***
Qwest Communications (NYSE: Q)	53.6%	**

Source: Capital IQ (a division of Standard & Poor's) and 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!
Where someone falls when discussing eBay as an investment often seems to hinge on whether they're a buyer or seller on the auction website. Investors like CAPS member fromthepit tend to view the millions of shoppers on the site as a key factor in its continued growth:

EBAY is a sweet business used daily by million of customers worldwide, no doubt is a good asset to keep in the long term, on the downside the company have furious competition, however it continue to have the edge and continue to be the leader in the market

On the other side are those like napa1769, who look at eBay's policies toward sellers and feel the auction house is cutting the legs out from under those who have built its success:

Ebay has become seriously anti-seller with its increased fees. Their greed will eventually become their downfall, as sellers will flock to more profitable venues such as Craigslist. Even Amazon will one day give it a run for its money. Ebay was once a company i admired and sold on frequently. Not anymore.

Certainly eBay is going to have to nurture its seller base, but even among the disgruntled, few will turn away from the critical mass of bidders the auction house is able to bring. It's now expanding its PayPal payment platform to make it more functional on a global stage, a seemingly more relevant enhancement than the tweaking Amazon.com did with its payment system. The market has seemingly priced all that in.

Selling for 25 times free cash flow, even at a discounted 12 times normalized earnings in 2011, doesn't make eBay appear cheap at this time, though in comparison to the lofty valuations of Amazon, Yahoo! (Nasdaq: YHOO), and Google (Nasdaq: GOOG), the online auctioneer doesn't look particularly overpriced either.

I'm getting the sense that eBay is fairly valued here, and when you look at analyst expectations for growth, eBay's PEG of 1.1 would suggest that, too. So I'm not seeing where the catalyst for future outperformance will come from.

Follow the money
What's your view? 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. Why not 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.