Welcome back to the world of the Cash Kings, where we highlight businesses that generate a healthy dose of free cash flow

Why is cash flow so important? Because it gives management the opportunity to boost shareholder value by:

A Fool's guide to free cash
Investing, after all, is about putting money up front today to get more of it in return tomorrow. Here at the Fool, we're firm believers that free cash flow, as opposed to traditional accounting earnings, is the best gauge of a company's health and profitability (or lack thereof).

So, with these cash flow lessons deeply engrained in your Foolish subconscious -- or maybe just bookmarked as a "favorites" page -- I'll highlight three more cash-flow rulers of our Motley Fool CAPS kingdom.

Unlike Vonage Holdings (NYSE:VG) -- a cash-burning company that CAPS Fools overwhelmingly dislike -- these are businesses with free cash flow-to-sales margins 15% and above (also known as the Cash King Margin), that our community is pretty bullish about.

So, sound the trumpets! Here's another trio of Cash Kings from CAPS:


Cash King



China Mobile (NYSE:CHL)




Applied Materials (NASDAQ:AMAT)








* trailing 12 months.

As always, don't consider these stocks as formal picks but as suggestions worth further investigation. After all, due diligence is the Fool's way to riches.

But for starters, here's a quick summary of these cash-throwing kings and how some of their loyal CAPS followers feel about them.

Mobile emperor     
With an impressive free cash flow-to-sales margin over 20%, China Mobile takes the honors as this week's most prolific cash king.

As mainland China's largest wireless operator, China Mobile has the widespread brand recognition, dominant market share (greater than 65%), and attractive growth prospects with 3G technology, to keep its war chest stuffed with cash.

Less than two weeks ago, CAPS player RafesUserName commented on the stock's recent drop:

CHL is taking advantage of China's ever growing demand for mobile solutions not to mention the messaging addiction. And they are the only real player. The other Big Two [China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU)] are going to have restructuring headaches for some time. When trading started again last week after the restructuring, CHL took a dive with everything else. So now we have a dip offering a great buying opportunity.

Majestic materials
The next cash flow monarch on our list is Applied Materials, the world's largest supplier of semiconductor manufacturing equipment.

Over the last few years, Applied Materials has leveraged its broad product offering, global customer support network, and the soaring growth of flat-panel displays to provide healthy dividends and buybacks for shareholders. And with the company's widely followed foray into the solar panel market, the cash should just keep on flowing.

A couple of weeks ago, CAPS player JustWokeUp talked price:

Great financials, great P/E (a bargain), great company in a great industry. This is a long term play, buying stock at a discount -- short term it might move sideways and perhaps even down a bit, but it means there is no hype and no euphoria built into the price, which is a good thing.

Storage sultan
Our last free cash flow ruler this week is EMC, one of the world's leading providers of enterprise storage solutions.

EMC's dominant competitive position, industry standard virtualization solutions, offered through its VMware (NYSE:VMW) subsidiary, and capital-light business model are what drive the cash for this king. And as several CAPS Fools have noted, EMC might even be an intriguing bargain at today's prices.

CAPS player Harry0925 explains:

EMC's core business is expected to earn a little over $1.25B this year. If you strip out their stake in VMW this leaves you with a stub valued at 8.5x earnings. No large-cap tech stocks trade for this multiple. ... I believe by next year, more or all of VMW will be spun out of EMC and this big relative valuation gap will have disappeared.

The Foolish bottom line
Free cash flow-generating companies like China Mobile, Applied Materials, and EMC are always among my top candidates to research further. Our Motley Fool CAPS intelligence database is a great place to look for your own Cash Kings or read how your fellow Fools feel about thousands of different stocks.

Click here to explore the forward-thinking CAPS community free of charge. And join us next time when I'll feature three more cash kings from CAPS. Until then, may your cash flow reign supreme.