3 More Kings of Cash

Close your eyes, Fool. Imagine that you're a billionaire financier with enough money to takeover 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?

More often than not, your main objective would be to get back, maintain, and then grow exactly what you had to fork out to acquire the business -- cash. After all, cash is precisely what needs to accumulate in order to build wealth and propel you higher on the Forbes list.

A Fool's guide to free cash
Investing is about putting money up 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) about which our community is overwhelmingly bullish as well. The Cash King Margin is a good way to account for size differences among companies, rather than simply using an absolute level of free cash flow.

Cash Kings rule
Unlike companies such as SunOpta (NASDAQ:STKL) and Interoil (AMEX:IOC), which struggle to keep the cash from gushing out their corporate windows, these companies have it practically flooding the mail rooms.

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

As always, this shouldn't be considered a buy list, 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 what some of our CAPS players feel about them.

This king holds all the records
With a whopping free cash flow-to-sales margin of more than 20%, Quality Systems takes the honors as this week's most prolific cash king. As a provider of leading record-keeping software to the health-care industry, this king has the market niche, rock-solid financials, and favorable demographics to keep its cannons stuffed with cash.

When it was first recommended by our team over at Motley Fool Stock Advisor, the company had a market cap of $132 million, was growing sales and income by more than 30%, had zero debt on its books, and had no hype surrounding its stock. As fellow Fool Seth Jayson points out, this is the type of perfect storm that produced 600% returns for readers who took the plunge in 2003.

CAPS All-Star TheCabbageMan is another Fool who goes on record to give "King Record-Keeper" his loyal support:

"The hospital industry has to go full EMR (Electronic Medical Records) to be competitive ... Hospitals will also need to pay for support plans to keep their investments running. Due to the sensitivity and 24/7 need for patient data, companies like this are here to stay."

A king's quest for maps
Navteq is another cash king that uses its dominant leadership position, intellectual property, and tremendous growth prospects to map out the fortunes of its shareholders. This Silicon Valley-based company was recommended by Stock Advisor due in large part to its most valuable asset -- an unprecedented map database that spans 50 countries.

Naturally, this coveted jewel is needed by developers of personal navigation devices (PNDs) as well as popular Internet mapping services like Google Maps and Mapquest. As PNDs and other navigation gadgets steadily gain market penetration, Navteq sits on a comfortable throne to benefit from the demand.

CAPS All-Star CosmoFool706 gives us some direction on where Navteq's maps will be heading:

"The deployment of this technology -- in the US especially -- still seems in its infancy. In a very few years, I think mapping technology in cars, smart phones, watches, and god-knows-what will be as common for adults as I-Pods are for, well, everyone."

Mexican king of concrete
Our last free cash flow king this week is Cemex, a Mexican producer of cement, ready-mixed concrete, and yet another Motley Fool Stock Advisor selection (I told you we adore free cash flow here at the Fool!).

Founded in 1906, Cemex is the world's third-largest cement company, with operations in more than 50 countries. Although the cement industry isn't exactly as glamorous as the music business, Cemex's financial performance over the years would have any shareholder singing its praises. Cemex has grown revenue nearly 20% on average over the last five years, while consistently posting double-digit returns on equity.

That type of financial strength and global reach makes Cemex a favorite in our CAPS community. TMFEldrehad, the undisputed king of CAPS, isn't too proud to bow to the sultan of cement:

"... this boring company grew earnings at over 25% from '04 to '05, and grew cash flow from operations by over 50% for the same period -- and is in a prime position to benefit from continual increases in construction in emerging markets. I'll take that kind of boredom any day."

The Foolish bottom line Free cash flow-generating companies such as Quality Systems, Navteq, and Cemex 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.

That's all for this week, Fools! Be sure to join us next week, when I'll feature three more cash kings from CAPS. Until then, may your player rating reign supreme.

Quality Systems, Navteq, and Cemex are Motley Fool Stock Advisor recommendations. Discover all of David and Tom Gardner's superior stock selections with a free 30-day trial subscription.

Foolish contributor Brian Pacampara always welcomes free cash handouts but holds no position in any of the companies mentioned. The Fool's disclosure policy is the set of rules that always rules Fools.