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 in the register and goes out the door -- remains the preeminent indicator of that company's worth. In short, cash is king.

Below, we'll look at companies that have proved 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 FCF growth rates exceeding 25% annually over the past five years, and then we'll pair them with the opinions of the 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)




Eli Lilly (NYSE:LLY)






Quantum (NYSE:QTM)



Transocean (NYSE:RIG)



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.

It might never reach such an iconic status that fans start tattooing the Macintosh logo on their biceps, a la Harley-Davidson, but Apple's iconic stature remains unassailable nonetheless. With its suite of must-have products, there's little surprise in its ability to generate copious amount of free cash flow. While the current recession might put a dent in the consumer's appetite for product upgrades, that seems to be a transient concern at best. Apple still possesses the technologies that will drive future profits.

One might want to look at the razors-and-blade business model to see how Apple will thrive in the future. As it has been famously told, King Gillette was able to give away the razors so that consumers would keep coming back to buy the blades. Today's ink jet printer-and-cartridge business is similar. Apple, for its part, has the same ability in its hands.

Even with the profits it makes on the iPod and the iPhone, the future catalyst could be its iTunes and Apps stores. Earnings from those businesses eventually may be enough to allow Apple to give away its MP3 players and smartphones, so that consumers coming back for more music and application downloads. Malcolm Gladwell, the pop-sociology author of The Tipping Point, Blink, and Outliers, says the idea has some merit, but because there remains value in the iPod and iPhone, there's no reason Apple wouldn't want to continue to reel in excess profits from them, too.

There's cutthroat competition out there from Research In Motion (NASDAQ:RIMM), while music streaming from Pandora and Yahoo! (NASDAQ:YHOO) Music has some observers thinking iTunes will soon be obsolete. But Apple investors can be rabidly protective of their stock. The more thoughtful shareholders among them understand that Apple's ability to alter consumer tastes will be what keeps the company in the forefront. Says CAPS member Gmoney91:

Apple is a one of the most iconic companies in corporate America today. The company's combination of [savvy] products and [undoubtable] status [makes] this company a home run hit. From the introduction of the IPOD to the most recent release of the IPHONE 3GS, the Apple [folks] know exactly what the consumer wants. This is highly evident considering that the newest IPHONE has sold more units faster than any of its predecessors, beating estimates of its analysts. Though recent earnings growth has slowed significantly compared to past [year's], look for this growth rate to regain its luster as the smartphone becomes more and more popular in the American and global consumer marketplace. I currently own the stock and look to keep it as long as it continues to work its magic.

Much like the other 136 companies making up the CAPS Rule Breakers Universe sector, Apple's stock has fallen by about 4% over the past month. But it has also recovered more than 73% of its value since hitting a low of around $78 a share back in January.

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. 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 rolling in the dough.

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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.