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 Interoil (AMEX:IOC) -- a cash-burning company that CAPS overwhelmingly dislikes -- these are businesses with free cash flow-to-sales margins higher than 15% (also known as the Cash King Margin) that our community is pretty bullish about.

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


Cash King Margin (ttm)

CAPS Bulls

CAPS Bears

Choice Hotels International (NYSE:CHH)




Canetic Resources (NYSE:CNE)




C.R. Bard (NYSE:BCR)




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.

The people's choice
With an impressive free cash flow-to-sales margin of more than 25%, Choice Hotels International takes the honors as this week's most prolific cash king.

As one of the largest hoteliers in the world, Choice Hotels has the capital-light franchising model, massive scale and distribution, and world-recognized brands -- including Comfort Inn, Comfort Suites, and Quality -- to keep its suites stuffed with cash. And with more than 900 hotels under development worldwide, those cash flows, in all likelihood, should only grow with time.

CAPS All-Star StockSpreadsheet made this choice pitch at the start of the summer:

All in all a reasonably priced stock with a decent yield and we are coming into the summer driving season which, I am assuming, is good for the companies' collection of inns and hotels. I think this company is attractively priced at around $42.01 a share and could hit $122.30 in five years, giving me almost a triple-bagger.

Dynastic dividend
The next monarch on our list is Canetic Resources, one of Canada's largest energy trusts with more than 80,000 boe/d of production. Canetic's large and diversified asset base, coupled with a tantalizing yield, helped my Foolish friend Matt Koppenheffer single it out as a dynamic dividend stock last June.

If you're bullish about higher oil and natural gas prices going forward, Canetic certainly looks like an attractive, not to mention timely, bet. CAPS player cluelessmorgan explains why:

Solid Financials. Well managed. Ratio of natural gas to oil is about 55/45. Monthly Dividends. Unsure Canadian tax policies have knocked it down. Very undervalued stock. Room to double or triple long term. The monthly dividends alone justify owning this stock.

No holds Bard
Our last free cash flow ruler this week is C.R. Bard (Bard), a developer of medical devices in the fields of vascular, urology, oncology, and surgical specialty products. Despite competing against device giants like Baxter (NYSE:BAX) and Boston Scientific (NYSE:BSX), Bard has been able to grow dividends and repurchase shares in each of the last five years.

Bard's market-leading products -- Vacora (biopsy device), CollaMend (hernia repair), and StatLock (stabilization) -- are what drive the cash flow for this king.

CAPS All-Star DatabaseBob chimes in:

Bard is reporting record profits, despite plowing money into R&D at a prodigious rate (27% growth '06 versus '05), which hurts earnings short-term but should fuel future growth. For its size, the company carries little debt and is considered quite financially strong. If markets get rocky over the next year or two and/or large-cap growth finally comes to the fore, BCR stock should prove a market beater.

The Foolish bottom line
Free cash flow-generating companies like Choice Hotels, Canetic Resources, and C.R. Bard are always among my top candidates to research further. Our Motley Fool CAPS intelligence database is a great place to look for your own Cash Kings or find out 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 time, when I'll feature three more cash kings from CAPS. Until then, may your cash flow reign supreme.   

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy is the strict set of rules that always rules Fools.