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 it to mask a company's true operations. Yet its 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 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 (out of 5)

Barrick Gold (NYSE:ABX)






Markel (NYSE:MKL)



Morningstar (NASDAQ:MORN)



Spartan Motors (NASDAQ:SPAR)



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, so use this list as a jumping-off point to dig deeper into the piles of cash.

The coming earnings season could be an indicator of whether the economy has hit bottom and is ready to rise again or we've still got further to fall. There's a lot of hope building up behind these quarterly reports. Stocks have bounced off 12-year lows over the past month as the turmoil underlying bank stocks abated and housing numbers caused builders to finally exhale. Yet initial indications still show a case of the jitters: Both the Dow and Nasdaq fell by about 2.5% yesterday.

If a case for recovery can be made, Morningstar may be a stock to benefit early. Aside from the attraction that its mutual fund ratings offer that would benefit from more investors getting back into the market, the individual segment contributed 21% of total revenues in 2008 while premium subscriptions, at almost 9% of total revenues, is the largest product offered in the segment. But of greater value to the company would be the boost to its advisor and institutional practices.

Assets under advisement declined 32% last quarter to $66 billion, meaning the fees it earns from them, which account for about 13% of revenues, suffered along with its clients. An economic turnaround would grow their value and earn Morningstar more money. While many simply know the firm as a mutual fund rating service, perhaps lumping it in with the likes of Moody's (NYSE:MCO), Standard & Poor's, or Fitch's Rating Service, it might be better to classify it with institutional information service providers like Bloomberg or FactSet Research (NYSE:FDS).

It's this misclassification of Morningstar by individual investors that gives more astute observers the idea that there's opportunity to be found here. CAPS member PsychoDr, for example, thinks the objective advice Morningstar provides will continue to be attractive and it could only be a better bet if it paid a dividend.

People will always pay for objective advice. Though profits have dropped, along with everyone else, these shares are oversold. People see them as a rating agency stock, though they are not at all involved in this area. Good strong company, have a solid reputation, and people will continue to use their advice, especially once the turmoil has settled. I just wish they paid a dividend.

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. Why not 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 continue to be rolling in the dough?

Moody's and Markel are Motley Fool Inside Value picks. Moody's and Morningstar are Motley Fool Stock Advisor recommendations. The Fool owns shares of FactSet Research Systems, Markel, and Morningstar. Try any of our Foolish newsletters today, 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. The Motley Fool has a disclosure policy.