Welcome back to the world of the Cash Kings, where we highlight businesses that generate a healthy dose of free cash flow. Why is cash flow so important? Because it gives management the opportunity to boost shareholder value through actions like:

  1. Paying dynasty-building dividends.  
  2. Buying back shares at attractive prices.
  3. Growing the business organically without having to borrow money or sell shares. 

A Fool's guide to free cash
Investing, after all, is about putting money up front today in order 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 health and profitability (or lack thereof).

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

Unlike General Motors (NYSE:GM) -- which is a cash-burning company that CAPS generally dislikes -- these are businesses with free cash flow-to-sales margins above 15% (also known as the Cash King Margin), that our community is overwhelmingly bullish about.

So, sound the trumpets! Here's another trio of Cash Kings from CAPS:


Cash King Margin (ttm)

CAPS Bulls

CAPS Bears

Chunghwa Telecom (NYSE:CHT)




Corporate Executive Board (NASDAQ:EXBD)








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 these cash-throwing kings, and how some of their loyal CAPS followers feel about them.

Taiwanese tycoon      
With a whopping free cash flow-to-sales margin of more than 30%, Motley Fool Income Investor pick Chunghwa Telecom takes the honors as this week's most prolific cash king. As Taiwan's largest telecommunications provider, Chunghwa has a "sticky" subscriber base, dominant market share in all telecom segments, and attractive growth prospects within 3G wireless markets -- all helping to keep its canons stuffed with cash.  

In addition, CAPS All-Star NetscribeTelecom says that a rock-solid financial position, coupled with fully integrated operations, make Chunghwa a pretty decent call:

Cash build-up amid a debt-free balance sheet easily cover its capital spending needs, rendering significant scope to enhance shareholder value. We think that these characteristics, combined with its extensive and high-quality networks, build Chunghwa Telecom into a fair enough stock to go.

Baron of the board    
Motley Fool Stock Advisor selection Corporate Executive Board is a free cash-flowing monarch that has built a massive network of 2,400 corporate members to become a leader in collaborative business research. Membership to the group gives companies like Alcoa (NYSE:AA), Coca-Cola (NYSE:KO), and Unilever (NYSE:UL) access to the latest studies and insights on best corporate practices.

Thanks to a steady dividend and disappointing stock performance over the past year, CAPS All-Star DatabaseBob thinks Corporate Executive Board is worth the research at today's prices:

Even if the broader market turns south, this company's sterling financials and strong, growing dividend should help it weather the storm. In addition to taking advantage of (in my belief) overdone selling, I chose this stock as part of a "flight to safety" after the market's 2/27/07 downdraft.

Sovereign screener
Our last free cash flow king this week is Cytyc, one of the world's dominant providers of women's health products. The company's ThinPrep system is already the most widely used method for cervical cancer screening in the U.S., while its other surgical products -- NovaSure (for menstrual bleeding), MammoSite (for breast cancer), and FirstSite (for risk assessment) -- should drive double-digit revenue growth over the next several years.   

It's that type of market positioning and product pipeline that have our CAPS community optimistic about the company's future. For example, Cytyc seems to have passed bugolfer's own screening process:

Close to a monopoly in Pap test market, leader in excessive bleeding market and a huge up and comer in the lumpectomy treatment market. They also have a dark horse with ductal lavage. Great margins, cash flow, and ROIC.

The Foolish bottom line
Free cash flow-generating companies like Chunghwa Telecom, Corporate Executive Board, and Cytyc 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 or read how your fellow Fools feel about thousands of different 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 cash flow reign supreme.   

For more Foolish usage of free cash:

Make 7 picks on CAPS by April 24 and we'll send you a free copy of The Motley Fool Five Star Report. Inside, you'll discover how to use CAPS as a research tool, and you will receive a recommended five-star CAPS pick poised to beat the market for the next decade or more -- one that you can easily translate into profits for your real-world portfolio.  Click here to get started now!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Unilever is a Motley Fool Income Investor pick. Coca-Cola is an Inside Value choice. The Fool's disclosure policy is the strict set of rules that always rules Fools.