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 operations. Yet its ability to generate cash -- what comes in the register and goes out the door -- remains the preeminent indicator of a 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 130,000 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)

Barrick Gold (NYSE:ABX)






Genentech (NYSE:DNA)



Schering-Plough (NYSE:SGP)



XL Capital (NYSE:XL)



Sources: 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.

If talking a good game can translate into market share, then EMC is sitting in the catbird seat. CEO Joseph Tucci recently said the data and storage specialist plans on stealing "significant" share from its rivals in this economy, a speech that caused shares to jump to their highest levels in six weeks.

But talk is cheap, and CEOs need a game plan to back up their jawboning. Tucci seems to have that in spades as well. Although EMC has announced plans to cut 7% of the workforce to save $350 million, none of those cuts will be coming in the sales department. The world's biggest maker of storage computers also said it would continue investing in R&D, equal to about 12% of revenues, and has plans for new flash memory products and new virtualization products, as well as planning to maintain its relationship with former subsidiary VMWare (NYSE:VMW).

EMC, which had been the subject of some takeover speculation, is plowing ahead with the virtualization and cloud computing plans it has forged with VMWare, also subject to some takeover rumors. Cisco Systems (NASDAQ:CSCO), an owner of a small portion of the virtualization spinoff, is said to be interested in possibly acquiring the rest, but EMC itself says it has no intention of changing its own relationship with the company.  

The combination of strategic growth initiatives and focusing on maintaining customer relationships has convinced some analysts that EMC's big talk might just turn into big results, since data growth rarely changes, regardless of the economy.

As the company already owns a third of the storage market, CAPS member Futuresmart agrees that EMC is the dominant player in the sector, and that its VMWare links improve its prospects:

EMC is the master in the game of storage and has control in VMW which is also the master in speedy storage access. Has to improve. :-)

Similarly, claygrant1974 sees storage becoming more important for an interconnected world, not less, and as one of the key players, EMC is in a prime position to capitalize on it:

One of the Internet's backbone companies. Storage is becoming more and more important, necessary, needed, and will only grow much more in near future. Still owns a lot of VMWare.

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 let us hear what you've got to say about these -- or any other stocks you think will continue to be rolling in the dough.

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.