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 it to mask a company's true operations. Yet its ability to generate cash -- what comes into 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 are prodigious generators of free cash flow (FCF) -- the amount of money a company has left over that it could 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 we'll pair them with the opinions of some 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 lead to your best opportunity to capture those gains.


Levered FCF
5-Yr CAGR, %

CAPS Rating  
(5 Stars Max)

Autodesk (NASDAQ:ADSK)



Symantec (NASDAQ:SYMC)



Teva Pharmaceutical (NASDAQ:TEVA)



Union Pacific (NYSE:UNP)



Waste Management (NYSE:WMI)



Source: 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.

Every week you dutifully separate your trash into segregated piles to be hauled away for recycling. Only thing is, as the economy implodes, there's little money to be made from the process. Automakers aren't selling cars; homebuilders aren't selling homes; and department stores aren't selling appliances. That means demand from steel and pulp mills isn't there for scrap metal, paper, and other recyclables. With commodity prices down as much as 60% and Republic Services (NYSE:RSG) joining with Allied Waste, garbage hauler Waste Management may have trouble recycling its strong revenue-generating capabilities.

CAPS member jmackman likes the fact that the company will raise its dividend by 7.4% to $0.29 a share. Waste Management has consistently raised its dividend since 2004, when it paid out just a penny a stub.

WMI is one of those rare stocks that combines consumer need and service. I may cut back on paying the guy who washes my cars but I will not be hauling my own trash to the dump anytime soon. They also are raising their dividend and it looks like their earnings can support it. I'm hunting issues that will pay me to own them. Lastly, has anyone ever seen a [Waste Management] truck and not known who it was? Recognition! Just like Pepsi.

Ring the register
Threats to Internet security continue to mount, and it seems like Microsoft (NASDAQ:MSFT) reports some new breach to its software almost every day. Last month, for example, Mr. Softy released a patch because of a "critical" security flaw in Internet Explorer that may have exposed about 1.5 million computers worldwide to viruses. That, of course, leaves a large opening for software security specialist Symantec.

It's doubtful that will change, and hacker threats will only continue. So CAPS member gonefishing2011 sees Symantec as never having to worry about where business will come from.

The need for Internet security and anti-virus products and services will not decline; the stock may actually act like a commodity in the near-term.

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. Why not head over to the completely free CAPS service and let us hear what you have to say about these or any other stocks. 

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Waste Management, PepsiCo, and Republic Services are Motley Fool Income Investor selections. Waste Management and and Microsoft are Inside Value selections.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.