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 a company's 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 proved themselves to be 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 FCF growth rates exceeding 25% annually over the past five years, and then we'll pair them with the opinions of the more than 135,000 members of the Motley Fool CAPS investor-intelligence community, to see which ones might have the best chance of outperforming the market.


Leveraged FCF, 5-Year Compounded Annual Growth Rate

CAPS Rating (5 Stars Max)

MasterCard (NYSE:MA)



Patterson-UTI Energy (NASDAQ:PTEN)



RF Micro Devices (NASDAQ:RFMD)



Vimpel-Communications (NYSE:VIP)



WellPoint (NASDAQ:WLP)



Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

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 determined by calculating its discounted future cash flows, so use this list as a jumping-off point to dig deeper into the piles of cash.

As bad as it's been, the semiconductor sector hasn't performed nearly as badly as analysts were expecting. In fact, April's global chip sales rose 6.4% from March's level, to $15.6 billion -- the second consecutive monthly increase. Analysts estimate that computer and cell-phone sales account for 60% of all chips, and those industries are now expected to improve over previous forecasts.

End-user sales are still estimated to be down compared with the levels of previous years -- PCs will be off 6%, and cell phones will fall by 7%. But those figures are lower than the previously anticipated declines of 12% and 15%, respectively. In particular, industry analysts expect smartphone sales to grow around 20% annually through 2014, and that they should account for 29% of handset sales at that time. Although Nokia (NYSE:NOK) dominates the field now with its Symbian operating system, others sporting Google's (NASDAQ:GOOG) Android operating system are expected to eat into that lead.

Applications and services are driving the pace of smartphone growth, regardless of who is actually making them. That agnosticism is good news for RF Micro Devices, a leading cell-phone and wireless-device chip manufacturer. Although the company reported wider losses in its most recent earnings report, mobile Internet devices are expected to be the next billion-unit electronics marker.

Still, RF Micro's near-term margins might experience pressure as average selling prices come down to help spur demand. But analysts are already factoring those conditions into their forecasts. Even though they're looking for RF's sales to drop by 11% this year, profit is now anticipated to come in at $0.06 a share, a dramatic increase from the $0.03-per-share loss they had forecasted only a few months ago.

Investors are watching this company closely as well, to see how it responds to the market's zigs and zags. CAPS member Babachrono admits to being worried about some of RF's financials, but with earnings expectations rising and new products in the offing, this CAPS All-Star is expecting them to rebound nicely.

Huge jump in SG&A has me a little concerned with falling economy. Long term debt is over 4 times cash on hand. Approximately 15 analysts following the stock, way too many for [RF Micro Devices] to be under valued. Recent upgrade based on anticipations of quarter beating results as well as some of the new products coming down the pipeline. ...  But if the UBS analyst is correct, stock is on its way up, up, up.

Follow the money
These stocks have left a trail of dollars, but it still 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? Let us hear what you have to say about these or any other stocks that you think will continue to be rolling in the dough.

Google is a Motley Fool Rule Breakers pick. Nokia and WellPoint are Inside Value selections. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.