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 results. Yet a company's ability to generate cash -- what comes into the register and goes out the door -- remains the preeminent indicator of its worth. In short, cash is king.

Below, we'll look at companies that have proven to be prodigious generators of free cash flow (FCF) -- the amount of money a company has left over that it could pay to its investors. We'll find companies with compounded free cash flow growth rates that exceeded 25% annually over the past five years, then pair them with opinions from some of the 150,000 members of the Motley Fool CAPS community to see which ones are likely to outperform the market.


Levered FCF 5-Year CAGR, %

CAPS Rating
(out of 5)

Amazon.com (Nasdaq: AMZN)



OYO Geospace (Nasdaq: OYOG)



STEC (Nasdaq: STEC)



Sturm, Ruger (NYSE: RGR)



Wal-Mart (NYSE: WMT)



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.

When you're an industry leader like Apple (Nasdaq: AAPL), you have to know competitors are gunning for you. Speculation is growing that Netflix (Nasdaq: NFLX) wants to create an application targeting a piece of the video streaming pie, which many anticipate Apple will go into now that it has launched its iPad tablet computer.

Apple also shoves back hard when challenged: It just hit rival HTC with a patent infringement lawsuit. So as it tries to protect its growing presence as a distributor of online media, look for it to try to force the studios' hand with a difficult proposition: You give any promotion to other services and we won't give you a prominent place on our platforms. That's just the sort of shoving match it's engaged in with music studios that have been giving Amazon.com one-day exclusivity before a song's street release in exchange for getting promoted on Amazon's music store site.

According to Billboard, Apple may be feeling the pressure as Amazon tries to gain more traction to challenge the omnipresence of the iTunes storefront. For songs that appear as part of Amazon's "Daily Deal" -- which is growing into an early showcase of expected big releases -- Apple has begun withdrawing its own iTunes marketing support. The studios are trying to wrangle their way out of the situation without angering Apple too much while preserving the benefits the Amazon promotions offer.

While the episode shows Apple's muscle, it also highlights how Amazon is willing to challenge the status quo and redefine how people think about its business. Investors long ago realized they shouldn't count the e-tailer out of any fight, and CAPS member dmpilot finds it has become a top shopping guide.

The reason I like [Amazon] is that they have found a way to weave themselves into the framework of how I search for a low price on items. Where as [eBay] used to be used to find good prices, in a way I feel [Amazon] has taken its place. Also, with all the customer reviews on products it's a great resource as well.

Down-home goodness
STEC shares have been hammered since hitting highs in the late summer because prime customer EMC is overstocked on the Zeus solid-state drives (SSDs) it orders from STEC and will carry its inventory into this fiscal year.

But the semiconductor business is coming back to life, and NAND capacity remains constrained, so we may yet find that enterprise-level interest in SSDs will grow despite the hiccup STEC has experienced in recent quarters. CAPS member TangoSukka continues to believe SSDs are the future for storage.

However - I believe this will outperform over the next 10 years (a long time, yah, I know) because of operating efficiencies that will be found with the move of certain operations to Malaysia. Also, as it stands right now, the future of the storage business looks to be SSDs which STEC makes, makes well, and makes for enterprise customers (the sweetest [plum]). 

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 have to say about these or any other stocks that you think will roll in the dough.

Apple, Netflix, and Amazon.com are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a bull call spread position on eBay. Wal-Mart is a Motley Fool Inside Value recommendation and OYO Geospace is a Motley Fool Hidden Gems pick. 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. The Motley Fool has a disclosure policy.