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 a company's ability to generate cash -- what comes into the register and goes out the door -- remains the pre-eminent indicator of its 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 with growth rates for free cash flow exceeding 25% annually over the past five years, then pair them with the opinions of the more than 165,000 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)

Hain Celestial Group (Nasdaq: HAIN)



Life Partners Holdings (Nasdaq: LPHI)



Sprint Nextel (NYSE: S)



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.

A sizzling opportunity?
Although best known for its line of teas, Hain Celestial Group has become an integrated manufacturer of organic food and body products. If it's organic, Hain wants it, and it will acquire as many companies as is necessary to attain it. Activist investor Carl Icahn doesn't see the growth-by-acquisition strategy as a problem, believing Hain is still undervalued. The stock shot up 7% when the billionaire revealed a 12% stake in the company recently.

Although acquisitions have allowed the company to expand beyond the narrow confines of tea, they also mean it's competing against rivals Dean Foods (NYSE: DF), Kraft (NYSE: KFT), and other, much larger, better-financed companies that are looking to get in on the organic foods movement, despite some experts' opinions that organic food is no more healthier than processed foods. Whole Foods (Nasdaq: WFMI), though, has proven it's here to stay, and CAPS member CEarles says Hain's portfolio of brands makes it a healthy investment nonetheless.

Growth can't continue forever at the pace of the last few years, but their stable of brands should experience some intrinsic growth. Meanwhile, market cap is approximately book value. Look for some growth of share price.

The head of the class
Die, already! That might sound like something from the viatical business, because it buys life insurance policies from their owners at a discount and only makes a profit when the person dies. And every year the owners live beyond the time the actuarial tables say they should, the returns that life settlement companies like industry leader Life Partners Holdings earn steadily decrease. Yet the insurance industry is predicated on maximizing returns despite the risks, and Life Partners Holdings has grown revenues at a 56% compounded rate over the past three years.

The viatical industry gives the owners, many of whom are elderly, cash for their policies rather than having them lapse because the owners can't afford the premiums. CAPS member powersatch notes it's an unusual business.

Life Partners makes a commission off of people buying and selling each others life insurance policies. This one ties into the "baby boomers" theme and adds some unique diversification.

Coming untied
The iPhone bandwidth hogs have degraded AT&T's (NYSE: T) service to such an extent that it has been forced to go to a tiered pricing structure for data to limit the impact on everyone else using the network. With T-Mobile also limiting excessive use of its network, analysts expect others to soon follow suit. Yet Sprint Nextel is taking advantage of the restrictions to say it won't limit usage on its core 3G or 4G network, though restrictions on out-of-network roaming are planned because Sprint pays for the usage of other carriers' networks.

Highly rated CAPS All-Star alexreising says Sprint is once again making a powerful distinction between itself and the rest of its industry.

Sprint's network, new marketing, and high quality phones flat rate plans and partnerships / equity with google, clearwire are setting them up for a diversified growth out of their slump... at the very least they are making a better and better case for a buyout in the future. HTC EVO is the first phone on the market than I clearly believe is superior to the Iphone 3G.

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 roll in the dough.

Sprint Nextel is a Motley Fool Inside Value recommendation and Whole Foods Market is a Motley Fool Stock Advisor 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.