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 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 140,000 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)

America Movil (NYSE:AMX)



Johnson Controls (NYSE:JCI)



GameStop (NYSE:GME)



Navistar International (NYSE:NAV)



Lennar (NYSE:LEN)



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.

Throughout the beginning of the market's collapse, the gaming industry was seen as virtually recession-proof. When times are tough, people are still going to want some form of entertainment, and the extended value that a video game offers is attractive, particularly when compared to other forms of discretionary spending.

Of course, what we've found out since then shows that not even the most ambidextrous, Monster-drinking, agoraphobic die-hard gamer can keep up the pace necessary to prop up the industry. Sales of video games began a five-month skid in February that was extended for yet a sixth month in August. Year-to-date sales are off 14%, meaning the industry needs to have a significant growth spurt for the balance of the year just to get even with last year's results.

Electronic Arts (NASDAQ:ERTS) saw sales of Madden NFL 10 drop 15% compared to a similar offering last year. That showing illustrates the difficulty the industry is having as a whole. It may be up to the recent release of dueling plastic guitar sets -- Guitar Hero from Activision Blizzard (NASDAQ:ATVI) and Rock Band from Viacom -- to jump-start sales for the remainder of the year.

The softness in software sales was evident in GameStop's own earnings report, where same-store sales fell a dramatic 14% last quarter. Although management has adjusted earnings downward, implying more negative comps in the back half of the year, there might be a surprise in store.

Sony dropped the price of its PlayStation 3, which served to bump up unit sales, though it may have lowered revenue. Indeed, PS3 sales surged 72% in August from the month before, hitting 210,000 units. Microsoft cut the price of the Xbox 360 by $100 as well, boosting sales 6% from the prior month, while Nintendo’s Wii jumped 10% in unit sales. GameStop might be projecting lower earnings, but it could nevertheless see a rise in store traffic.

The improving economy is a good omen to CAPS member MLIAOM09, who sees GameStop supplying the fix for a gamer's addiction:

Gaming will make a strong come back with improving economy. Gamers/friends I know are like drug addicts(bad analogy but you know what I mean)...gotta have it;)

This may be wishful thinking, but maybe the stock market’s more than 60% rise since March indicates that there is pent-up demand to spend, spend, and spend -- and that might just translate into bigger sales at GameStop, too.

Follow the money

What's your view? 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've got to say about these or any other stocks that you think will continue rolling in the dough.

Activision Blizzard, GameStop, and Electronic Arts are Motley Fool Stock Advisor picks. Microsoft is an Inside Value selection. America Movil is a Global Gains recommendation. Try any of our Foolish newsletter services 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.