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 that metric 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)



Chemical & Mining Co. of Chile (NYSE:SQM)



NetEase.com (NASDAQ:NTES)



Take-Two Interactive (NASDAQ:TTWO)



Terex (NYSE:TEX)



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. Let's use this list as a jumping-off point to dig deeper into these companies and their piles of cash.

It's probably most exciting to discuss lithium battery production when considering Chemical & Mining Co. of Chile, or SQM for short. The company definitely stands to benefit from the push for alternative-energy vehicles, and the potential for plug-in cars like the super-sleek Tesla. However, SQM's lithium carbonate production accounts for only about 15% of its revenue. Its potassium production and other specialty plant-nutrition products are much more important, collectively generating half of the company's sales.

SQM's earnings report ought to give some hope to other fertilizer producers such as PotashCorp (NYSE:POT) and Agrium (NYSE:AGU). The potassium producer saw a 33% increase in earnings, with operating profits climbing 39%, despite a slightly lower level of sales volume. In contrast, analysts anticipate that in their current quarters, PotashCorp's profits will drop 47%, and that Agrium will post an 80% drop year over year. SQM was able to command higher prices while lowering costs, and it expects the fertilizer and industrial markets to recover by the second half of the year.

The lithium component of its business has been growing each year, and SQM is the world's largest producer of the mineral. For that reason, CAPS member strat91 thinks the mining company may have the inside track for growth:

If lithium battery technology becomes the favored technology for hybrid vehicles, sqm is in one of the best positions to fill the lithium demand. Lithium batteries weigh considerably less than the NiMH batteries currently used in the Prius. I'm not sure if the hybrid or the electric car is a viable long term solution, but it will be in demand for several years to come.

Follow the money
Don't just follow the trail of dollars these companies have left behind -- start your own research on Motley Fool CAPS. You can 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 share your thoughts about these or any other stocks that you think will continue to roll in the dough.

NetEase.com and Take-Two Interactive Software are Motley Fool Rule Breakers picks. Amazon.com is a Motley Fool Stock Advisor recommendation. The Motley Fool owns shares of Terex. 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.