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 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 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 we'll compare that list to the opinions of the more than 130,000 members of the Motley Fool CAPS investor intelligence community, to see which candidates might have the best chance of outperforming the market.


Levered FCF 5-Yr CAGR, %

CAPS Rating (out of 5 stars)

Akamai Technologies (NASDAQ:AKAM)






Hansen Natural (NASDAQ:HANS)






Sohu.com (NASDAQ:SOHU)



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.

Despite racking up impressive cash flows over the past five years, bond insurer MBIA may not be able to survive the collapse of the mortgage markets. It's already feeling the pressure from the incredibly bad bets it placed in mortgage-backed securities. Worse yet, having tried to isolate the damage by splitting off those operations, it's now under attack by hedge funds, banks, and investment funds. These critics allege that the split was not only fraudulent, but also leaves MBIA basically insolvent.

Like another troubled bond insurer, Ambac Financial (NYSE:ABK), MBIA has stopped writing new business, because its ratings have been slashed to junk status. The collapse of MBIA's formerly triple-A credit ratings led Warren Buffett to use the stellar credit of Berkshire Hathaway (NYSE:BRK-A) to start his own municipal bond insurance business.

Yet fears of insolvency still run rampant. Syncora became the first insurer to default on its claims payments. That led many observers, including hedge fund investor Whitney Tilson, to worry that MBIA is massively under-reserved, and that its assets may still ultimately be seized. The insurer recently sued Merrill Lynch to avoid having to pay out claims, which weakens its authority and undoubtedly raises questions among other customers who purchased insurance from it.

MBIA sought to stave off disaster by getting regulatory approval to split its business in two, separating the more stable municipal bond business from the toxic mess of structured bonds that it insured. But the structure of the new entity means the insurer will have just $10 billion in claims-paying resources to guarantee some $240 billion in structured-finance bonds and other non-U.S. bonds.

Many investors agree that MBIA looks dire indeed. With much of the financial community lined up against its decision to wall itself off from the riskier side of its business via a denuded entity, CAPS All-Star member belgiuminvestor predicts the worst: "this one is worthless, other banks are furious at them for ripping them off and will not leave the holding company a penny."

Follow the money
Fools shouldn't simply follow these companies trails of dollars. As MBIA's example proves, 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 keep on rolling in the dough.

Akamai Technologies, Hansen Natural, and Sohu.com are Motley Fool Rule Breakers selections. Berkshire Hathaway is a Motley Fool Inside Value recommendation. The Fool owns shares of Berkshire Hathaway. Akamai is a technology partner of The Fool. Try any of our Foolish newsletter services free for 30 days.

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