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 into 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 proved themselves to be 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 FCF growth rates exceeding 25% annually over the past five years, and then pair them with the opinions of the more than 135,000 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-Year CAGR, %

CAPS Rating (out of 5)

Priceline.com (NASDAQ:PCLN)



Public Service Enterprise Group (NYSE:PEG)



Quality Systems (NASDAQ:QSII)



Sigma Designs (NASDAQ:SIGM)



United States Steel (NYSE:X)



Sources: 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.

At first glance, you'd think that an investment in online travel agency Priceline.com wouldn't be an intuitive one. The economy is in the toilet, domestic and international air travel in the U.S. fell by 3.5% in 2008, and summer air travel this year is expected to fall by 7%, according to the Air Transport Association of America. The "staycation" is a more popular destination than ever before. Why would a company that makes its money booking reservations for airlines, hotels, and car rentals make sense as an investment now?

Because if you're traveling, you're going to try to save as much money as possible, and with airlines and hotels looking to ensure that their seats and rooms are as filled as possible, you can get great deals through sites such as Priceline, Travelzoo (NASDAQ:TZOO), or Expedia (NASDAQ:EXPE).

And investors can get a good deal by looking at how the online travel space will shake out. Two years ago, Captain Kirk (a.k.a. William Shatner) and his price-negotiating sidekick Nofee eliminated booking fees on tickets at Priceline, and the company has been gaining market share as a result. Earlier this year, Expedia tested a no-fee program, and it's now had to make the program permanent in order to compete more effectively. Orbitz Worldwide and Travelocity have taken the same step, but on a temporary basis, for now. Bad for Priceline, right? Well, the loss of booking fees helped cause Expedia's first-quarter revenue per ticket to plummet 14%, and Orbitz says that if it can't effectively make up the difference, cash flow and liquidity could take significant hits.

So Priceline has had ample opportunity to adjust to the lower revenue that resulted from fee elimination, and it was also able to cut its fees on hotels last year. Now it's dropping change-and-cancel fees too, like its rivals, so expect Expedia's and Orbitz's quarterly results to look poor as they learn to adjust to more pricing pressure.

All-Star CAPS member coryjobe believes that while overall industry softness may affect Priceline's profit, it will retain its leading position because of the need for cost-conscious consumers to find the best price available:

Customers have the choice of purchasing in the traditional, price disclosed manner, or of using the unique ''Name Your Own Price'' service, which allows them to make offers for travel services at their own, discounted price. The company collects customers' offers and matches them against a proprietary database of seller inventory.

Weakness in spending might slow growth in coming quarters, they should however continue to benefit off its "Name Your Own Price" feature which will appeal to the cost-conscious travelers.

Although Priceline carries a lower star rating than the two-star Orbitz and Expedia -- and the same lowly one-star nod as Travelzoo -- only Priceline was able to show a profit over the past four quarters. Its ability to do so probably accounts for the stock's stellar performance in the past six months.

Follow the money
While these stocks have left a trail of dollars 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 have to say about these or any other stocks that you think will continue to roll in the dough.

Sigma Designs is a Motley Fool Rule Breakers pick. Priceline.com and Quality Systems are Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.