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 it 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 145,000 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-Yr CAGR, %

CAPS Rating 
(out of 5)

Agilent Technologies (NYSE:A)



Jacobs Engineering (NYSE:JEC)



Marvell Technology (NASDAQ:MRVL)



MedcoHealth Solutions (NYSE:MHS)



Western Digital (NYSE:WDC)



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.

The massive health-care bill that just passed the U.S. Senate helped boost shares of industry stocks both for what it contained and what it didn't.

It's natural that since the bill no longer contains the nationalized health-care provision -- but still mandates that everyone have coverage or face penalties for not doing so -- insurers such as UnitedHealth Group (NYSE:UNH) will see their shares rise. It's easy to expect their business will grow as the government forces people to get coverage.

The flip side is what it didn't contain, such as a tax on pharmacy benefit managers like MedcoHealth Solutions and CVS Caremark (NYSE:CVS). They feared such a provision would be included at the 11th hour, though it may eventually surface as both houses of Congress haggle over details -- there's a reason they say don't watch sausages or laws being made, as both are not for queasy stomachs. But CAPS member adamdazzle finds a more basic reason to suggest MedcoHealth Solutions will outperform the market: He sees its ability to generate outstanding returns for investors as a key factor. The only returns taxpayers will see growing, however, are those we file with the IRS.

Driving forward
Smoke-filled, backroom deals may be common in Washington for generating surprises, but the tech industry has shown some eyebrow-raising strength of its own. The market researchers at IDC report that PC sales, for example, actually grew during the recession this year, and they're expected to continue increasing at double digit rates for the next few years.

That's probably helped disk drive maker Western Digital blow past analyst expectations for the past few quarters, and it's enough of a reason for Hotpicks101 to suggest it will be a long-term winner:

It's a tech stock that has constantly beat earnings forecasts quarter after qrtr, gaining free cash flow and trades at a P/E ratio of around 15. Wish I would have seen this one earlier since it's overbought and may fall hard if market decides to turn on us but still a good investment for the long term.

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. 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 continue to be rolling in the dough.

MedcoHealth Solutions and UnitedHealth Group are Motley Fool Stock Advisor recommendations. Unitedhealth Group is a Motley Fool Inside Value selection. The Fool owns shares of Unitedh=Health Group. 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 other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.