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 them to mask a company's true operations. Yet the ability to generate cash -- what comes in 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 have proved themselves to be prodigious generators of free cash flow (FCF) -- the amount of money a company has left over that it could potentially 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, and then we'll pair them with the opinions of the more than 120,000 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, and five-star stocks did even better. Keeping an eye on these top stocks might signal your best opportunity to capture those gains.


Levered FCF 5-Year CAGR

CAPS Rating (5 Max)

Hansen Natural (NASDAQ:HANS)



Lockheed Martin (NYSE:LMT)



Peabody Energy (NYSE:BTU)



Vaalco Energy (NYSE:EGY)



ValueClick (NASDAQ:VCLK)



Sources: 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.

The high price of oil helped Vaalco Energy stay in the black again. Being able to sell almost 10% more oil at an average price of $107 in the last quarter resulted in a 150% increase in profits. CAPS member bridgepro3 saw that one coming:

Revenue ($55.3M vs $24.1M) increased 130% in 2 qtr YOY. Increased price of oil accounted for $23.4M in increase and number of barrels produced resulted in $7.8M more in revenues. 3 qtr should be even greater in production of barrels.

Ring the register
It's a little more of a dicey situation for coal producers such as Peabody Energy and Arch Coal (NYSE:ACI). With a new administration giving off mixed signals about how it wants to handle this abundant resource, that seems partially to blame for coal stocks remaining at depressed levels (amongst everything else going on in the markets). CAPS member TSIF sees China as the best avenue of growth for Peabody's immediate future.

Peabody supplies coal to 10% of the works power plants. The recent approval to move into China that is building coal fired plants at a record pace will greatly increase … sales. Coal fired plants will remain a top producer of energy as filtering and pollution reduction costs outweigh the need for the electricity.

Change agent
Only Hansen Natural would think that its recently quarterly performance was a subpar effort, perhaps one more worthy of Jones Soda (NASDAQ:JSDA) than an industry leader. Yet the drink maker maintains a solid financial footing, in addition to pricing power, that has CAPS members like All-Star DemonDoug seeing it surviving even the toughest of times.

The answer: One with no debt.

The question: What kind of company is most likely to survive a severe downturn, even a depression, and possible U$ dollar deflation (and therefore beat the S&P 500)?

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. Head over to the completely free CAPS service, and let us hear what you have to say about these or any other stocks that you think will continue to roll in the dough.