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 160,000 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)

ANSYS (Nasdaq: ANSS)



Apollo Group (Nasdaq: APOL)






Source: Capital IQ (a division of Standard & Poor's) and 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.

A sizzling opportunity?
Captain Chesley Sullenberger's skill and temperament under stress were perhaps the biggest factors in guiding his crippled jet to a safe landing on New York's Hudson River last year. The feat also highlights the craftsmanship that went into the plane's design, allowing it to absorb the bird strikes that apparently caused the engine failure.

That sort of design experience begins in the planning process, using computer-aided engineering from the likes of ANSYS to simulate testing temperature fluctuations, acceleration loads, and vibration extremes such as those that can be caused when birds collide with airplane engines. Today, ANSYS' CAE software is used in automobile design, semiconductors, and the oil and gas industries. While facing competition from Autodesk (Nasdaq: ADSK), Mentor Graphics (Nasdaq: MENT), and Dassault Systemes, it also considers them partners both from a technical and marketing perspective.

ANSYS has produced prodigious amounts of free cash flow and 35% compounded annual growth in revenues, outstripping any of its rivals, yet remains competitively valued compared to them. That could be why 97% of the CAPS members rating ANSYS believe it will outperform the market. I'm marking the software developer to continue its market-beating ways on the ANSYS CAPS page and recommend you engineer an opinion there, too.

The head of the class
"It's the economy, stupid" was a motivating catchphrase during the Clinton administration, but it also underscores why for-profit educators like Apollo Group and ITT Educational Services (NYSE: ESI) continue to see strong enrollment numbers. With an ailing economy and unemployment rates still unacceptably high, people are returning to the classroom in droves. Apollo's University of Phoenix enjoyed a 15% year-over-year jump in degreed enrollments, fueled by a 9% rise in new enrollments this past quarter.

Although higher enrollment numbers are good, they also tend to increase the educator's bad debt expense, which rose to 6.9% of revenue, up from 4.1% a year ago. Even so, the numbers were a lot better than what Wall Street expected, and the stock staged a recovery from the hit it took last October when the SEC launched an investigation into its revenue recognition practices.

Considering its growth prospects, CAPS All-Star TMFDitty finds it trading at an extremely cheap price:

*The* leader in for-profit education, Apollo Group sells for an EV/FCF ratio of less than 11, with growth projected at 17% or thereabouts over the next five years. Plenty of cash to boot -- buy.

A nice payday
The lousy economy has also helped pawnshop operator and payday lender EZCORP, where people turn as an easy source of cash. Greater sales volume for merchandise, an increase in same-store sales, and higher fees generated from payday loans allowed EZCORP and rival First Cash Financial Services (Nasdaq: FCFS) to achieve rich results last quarter.

CAPS member theoxenity acknowledges that states have been imposing limits on their businesses, but notes that those who turn to EZCORP and its rivals are precisely those whom traditional financial institutions have been turning away. With conditions not really improving, it should have a steady stream of business:

The average consumer has a lot of debt and without collateral, banks are not loaning money to them. The only place that will lend them money is places like EZCORP. 
I see this company outperforming and will be 30-40 range in the next couple of years.

EZCORP has been one of my top picks on CAPS for several years now and I see no reason that should change. You can hit a payday, too, by telling us on the EZCORP CAPS page whether you think it is pawning its future.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.