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 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 -- 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 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.


Leveraged FCF 5-Year CAGR, %

CAPS Rating (Out of 5)

American Capital (NASDAQ:ACAS)



Dow Chemical (NYSE:DOW)






Harley-Davidson (NYSE:HOG)



Oshkosh (NYSE:OSK)



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.

Not so long ago, buyers would have to wait months for their Harley-Davidson V-twins to be shipped. Used bikes retained their value, and owners were often able to sell theirs at the same price they had paid, because buyers wanted to get a Harley now. Then Harley caught the growth bug and started hogging profits, at one time hoping to ship as many as 400,000 bikes in one year. But that period is now seen in the rearview mirror as a road marker from a different time. The Hog farmer shipped just over 303,000 bikes in 2008 (down 35% from the year before) and plans to ship only 212,000 to 228,000 this year.

This isn't a one-vehicle crash and burn, though. Polaris Industries (NYSE:PII) saw sales drop 25% on its heavy Victory bikes, though it says it gained market share, while both Honda (NYSE:HMC) and Yamaha saw bike sales fall in the first six months of the year. U.S. motorcycle sales declined by 31% in just the first quarter alone.

Harley's management believes one of the top things it needs to do now is to protect the brand, and one of the easiest ways to do that is to ship fewer bikes than its dealers have demand for. Delaying gratification for buyers might achieve that goal, and the steeper production cuts Harley announced will have the salutary benefit of preserving cash, too.

Yet as bad as Harley's results looked, there's a bit of hope contained therein that could get the bike maker's engines revving again. Or, at least, its stock.

While Harley badly missed analyst estimates, much of the miss was due to two non-cash charges related to its finance arm totaling more than $100 million. Without those charges, Harley would have recorded profits of $0.41 per share and beaten estimates.

TMFDitty is having none of it. Our highly rated CAPS All-Star member notes that production cuts seem to be more a function of demand falling below its estimates than of any "brand protection" notions that management dreams up.

Unless and until I see inventories stabilize, I cannot imagine this one outperforming the market. No matter how many times management promises to get the inventories under control, they just keep rising ... as sales keep falling. Cash burn is rampant, and even a vote of confidence from Warren Buffett now looks misplaced.

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 to be 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.