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 the 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 150,000 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)










Starbucks (NASDAQ:SBUX)






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. With that in mind, use this list as a jumping-off point to dig deeper into these companies' piles of cash.

How can a stock that looks so good be so bad? Navigation device maker Garmin boasts inexpensive shares, no debt (thank you, TomTom, for winning the TeleAtlas bidding war), and it's still generating oodles of cash. Throw in a dividend that yields 2.3%, and you'd think investors would be fighting to scoop up this stock.

In reality, this is one of those classic "cigar butt" investments. It may have a just few puffs left on it before the stub goes out cold. Garmin's technology has been overwhelmed by cell phones; first, they included navigation apps on their phones for a fee, but now both Google (NASDAQ:GOOG) and Nokia (NYSE:NOK) are giving away maps for free.

Personal navigation devices have become commodities, and even Garmin's patented technology lends no real competitive moat. Providing in-dash mapping for the automotive market might boost the company's fortunes, but that field involves stiff competition, and depending too much on it might make Garmin more analogous to the nearly forgotten pager industry. There's a narrow slice of the world that still needs and uses pagers, but it's a steadily dwindling niche that will eventually succumb. Same goes for GPS in your dashboard, instead of your phone.

Like Garmin, Starbucks was a victim of the recession, and perhaps even its own success. But the java giant still has a ready, willing, and eager market to serve that can perk right up again. Garmin does not. Even its marine and aviation divisions, which ought to give it a solid base, are generating fewer sales. Admittedly, that could be just as much a function of the state of the economy. But these divisions were always a small component of Garmin's overall revenue, and they underscore the aforementioned parallels with pagers.

In short, the days of Garmin's copious cash  are rapidly drawing to a close. There are value stocks and value traps, and Garmin seems more like the latter to me. A growing number of investors seem to concur. CAPS member mgramfool thinks a changing market will leave the GPS maker high and dry: "Unfortunately, the tide has turned and GPS systems are flowing toward Google and the cell phone makers, leaving GRMN wondering where to go next."

Not everyone agrees, though. CAPS member Aneirin's outperform rating on Garmin hinges on the company's cheap valuation, while coolhandluke217 maintains hope in its aviation technology. In fact, 93% of the nearly 5,200 CAPS members who have rated Garmin believe it will outperform the broader market averages. I agree that it might be able to do so for a while yet, but I think the clock is ticking down on this investment. I've marked the stock to underperform on CAPS.

Find your way to the Garmin CAPS page, and map out your own view on whether the GPS maker is doomed to wander lost in the wilderness.

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 share your thoughts on these or any other stocks that you think will keep rolling in the dough.

Nokia is a Motley Fool Inside Value choice. Google is a Motley Fool Rule Breakers recommendation. Starbucks is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services 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.