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 a company's ability to generate cash -- what comes in the register and goes out the door -- remains the preeminent indicator of its worth. In short, cash is king.

Below, we'll look at companies that have proven themselves 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, then pair them with the opinions of the more than 130,000 members of the Motley Fool CAPS investor intelligence community, to see which ones might have the best chance of outperforming the market.


Levered FCF 5-Yr CAGR, %

CAPS Rating (5 stars max.)

NYSE Euronext (NYSE:NYX)



PotashCorp (NYSE:POT)



Thermo Fisher Scientific (NYSE:TMO)



Titanium Metals (NYSE:TIE)



XL Capital (NYSE:XL)



Source: 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. With that in mind, use this list as a jumping-off point to dig deeper into these companies' piles of cash.

"Permanent demand" is one of the typical bullish arguments for commodities such as fertilizer. After all, farmers need fertilizer regardless of the economic climate, because people (and animals) have to eat. This demand holds steady in the United States, but it may be even more pronounced in developing economies, whose populations tend to adopt a more meat-heavy diet as they grow affluent. More livestock requires relatively more feed.

Of course, one of the wildcards in the industry is China, which is a big consumer of fertilizer, importing 5.1 million metric tons of potash last year. PotashCorp anticipates that China will boost imports to 7 million to 9 million metric tons this time around. While the demand side of the equation seems in little doubt, what price those tons of fertilizer might fetch is more of a toss-up.

Russian and Belarusian potash miners recently agreed with Brazilian importers to accept a price of $750 per metric ton for potash, down 25% from a year ago. Both PotashCorp and Agrium (NYSE:AGU) had been waiting to see the pricing trend, since they expect China to use that same price in its own negotiations with potash exporters. China currently pays $600 per metric ton, and these Canadian potash producers are hoping that it agrees to a price increase of $200, which would be in line with the increases accepted by Japan and Korea late last year. Now that Russia has come out with a significant cut in pricing, PotashCorp, Agrium, and Mosaic (NYSE:MOS) may find it harder to get the higher prices they sought.

However, the Russian and Belarusian deal only specifies prices until May. If tight credit markets delay purchases, the back half of the year may allow pent-up pressure to push fertilizer prices higher. PotashCorp's stock may be weak now, but its proven cash-generating capabilities could cause growth to sprout.

The CAPS community seems to recognize this point, since 96% of the 4,515 members rating PotashCorp mark it to outperform. Northville, for example, sees the demand component holding sway:

[PotashCorp] may have a little bit more debt than I'm comfortable with in this environment, but it has the ROI and cash flow to easily handle it. The growing world population will drive demand for it's product and it will be relatively insulated from the current economic turmoil (after all, you have to eat).

Follow the money
When pursuing the trail of dollars these stocks have left in their wake, 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've got to say about these or any other stocks that you think will rake in the dough.

NYSE Euronext is a Motley Fool Rule Breakers recommendation. Titanium Metals is a Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.