Had Jerry Maguire been an investor instead of a 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
(5 Stars Max)

Amazon.com (NASDAQ:AMZN)



Excel Maritime (NYSE:EXM)



Republic Services (NYSE:RSG)



salesforce.com (NYSE:CRM)



Universal Insurance Holdings (NYSE:UVE)



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.

According to one analyst, Amazon.com is now responsible for as much as one-third of all e-commerce transactions in the U.S., which comprises gross revenues from its organic business as well as net commissions from third-party sellers. Over the past 12 months, Amazon.com has earned $645 million in profits on more than $19 billion in sales.

Investors perhaps need to consider whether Amazon.com is getting too big. Sales grew 19% last quarter and analysts are anticipating them to grow an additional 15% when the e-tailer reports earnings next week. Over the long term, they expect that Amazon will integrate itself even further into the fabric of e-commerce, as they expect sales will grow 22% annually over the next five years.

Consider what happens when firms get "too big." Microsoft (NASDAQ:MSFT) is still facing antitrust persecution for producing a wildly successful product. Google (NASDAQ:GOOG) almost had the Department of Justice filing antitrust charges against it last year when it was pursuing Yahoo! And we're going to be paying for banks that were deemed "too big to fail" for a long, long time.

Investors need to ask themselves: At what point does Amazon enter this elite group of businesses that government decides wield too much control and power, and thus seeks to wreck their operations? No doubt the supposed glitch over the weekend that resulted in gay- and health-related books losing their sales ranking and main search page positioning would provide good fodder for those who would seek a greater government role. Another so-called "AmazonFail" might be enough to turn Amazon's winning stock back on itself.

There are some investors who already think the e-commerce leader has seen its shares get too far ahead. CAPS member MicroCaptain thinks that although Amazon itself is a good business, if the markets confirm that the recent surge was little more than a sucker's rally, investors could find themselves holding shares that are greatly reduced in value:

Great company, bad stock at this price ($79.77). Once again, investors are displaying irrational exuberance over AMZN. When the next downturn in the market hits, this stock will get hit hard. How hard? See that huge gap up in the chart at the end of January? The price never retraced to fill that gap. I think it will in the next downturn.

It's a weird world we live in when we tear down businesses that prove successful and build up those that failed. Amazon.com may need to perform that high-wire balancing act of improving upon its winning ways -- just not too much.

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.

Amazon.com is a Motley Fool Stock Advisor selection. Republic Services is a Motley Fool Income Investor recommendation. Microsoft is a Motley Fool Inside Value selection. salesforce.com and Google are Motley Fool Rule Breakers recommendations. 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 here. The Motley Fool has a disclosure policy.