Top Cash Cow Stocks

Financial websites have given investors more tools than ever to screen the markets for stock ideas. But those screens provide just the raw numbers -- not the story behind them. What might look like the start of a trend could merely be a one-time blip. Let's enlist Motley Fool CAPS to color in the outlines these numbers create.

To find the cream of the crop of stocks with high cash flow, we'll screen for equities with:

• A market cap of at least $250 million.
• An enterprise value-to-free cash flow ratio of less than 7.5.
• Free cash flow of at least $100 million.
• A balance sheet showing at least $500 million in cash and equivalents.

Then we'll tap the collective intelligence of our 86,000-plus CAPS investors to see whether these companies present real opportunities -- or whether they're priced low for a reason.

Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today:

Sit up and fly straight
The stock on our list with the highest EV/FCF ratio, Boeing, has been growing cash flow steadily over the years, as demand for commercial and military aircraft continues to grow. But what got the aircraft manufacturer in the "cheap" category recently was a greater-than-25% drop in its share price over the past six months.

The market's recently been transfixed by a massive $40 billion deal for in-air refueling tanker planes, which the Air Force was shopping to Boeing and a consortium of competitors led by Northrup Grumman (NYSE: NOC). Northrop ultimately won the deal, prompting numerous protests from Boeing and many politicians, calling for the Air Force to reconsider and favor the all-American supplier.

If the Air Force decision stands -- and I think it will -- the recent contract loss means that Boeing will miss out on a significant new stream of revenue that would have boosted its top line by some 5% over several years. But Boeing is highly diversified, and one lost contract won't slow down the company's business with myriad other customers. After all, operating cash flow grew by nearly 28% last year alone.

In terms of valuation, fellow Fool Rich Smith makes a great case that Boeing looks most attractive when you consider its growth in free cash flow and growing backlog. I have to agree with him (and the majority of CAPS investors) that the outlook for Boeing is bright, and that the recent tumble in the stock presents a good opportunity. Indeed, more than 92% of the 2,525 investors rating the company have weighed in bullishly as well, voting for Boeing to beat the S&P in the future.

Bitter pills
For biopharmaceutical companies, cash is king. In ViroPharma's case, there's plenty of it on the balance sheet -- $584 million at the end of 2007 -- and a good portion still flowing in from sales of its marketed drug Vancocin. Recent sales growth is declining as the drug matures, though, and investors have been somewhat skeptical about the future of ViroPharma's pipeline.

With no blockbuster drugs in the near term, ViroPharma is currently trading just above the value of the cash it holds.  Potential competition from a Genzyme drug also weighs on the company, but at this point, ViroPharma is priced as if nothing will go its way in 2008 and beyond. Seeing a beaten-down opportunity, CAPS investors generally agree that, even considering the risks, the stock still presents an opportunity. An overwhelming 940 out of the 956 investors rating the company are bullish.

Let 86,000 investors be the judge
The collective wisdom of a huge pool of investors can quickly add color to a whitewashed page of numbers. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury, and should perform their own research.

Want to see your favorite screen results run through the wringer in the CAPS community? It's free to tap the knowledge base, and even give your own opinion, in Motley Fool CAPS.