I enjoy following businesses that churn out good, steady cash flow year after year but don't have tremendous growth stories that draw in the masses. This is the basic buy-what's-boring theory, and I've found that it works quite well across a number of industries.

Many of the companies in the furniture industry are a good example of this dynamic at work. In the last couple of years, the competitive threats from overseas and the large number of competitors domestically have brought multiple opportunities for investors to pick up furniture companies with solid free cash flow on the cheap.

Footwear in all shapes and sizes
Like the furniture industry, the shoe industry regularly has a number of companies that go through cycles of being undervalued. For cost and competitive reasons, the industry as a whole isn't terribly well-regarded, but there are a number of smaller players that are consistently profitable, have solid long-term management with ownership stakes, and have outsourced their manufacturing to better manage rising costs.

Keeping the above points in mind, the primary reason I like a number of shoe companies is the same reason I like a number of furniture companies: that consistently strong free cash flow. It also helps that shoes need replacing regularly. The free cash flow dynamic is true even when sales growth is slow or slightly down, which is the time that tends to be the best opportunity to pick up shares of shoemakers if you believe that the free cash flow dynamics are still in place.

The table below highlights a few of the players in the footwear industry and the free cash flow, net cash, and rough-cut free cash flow valuation of each of them as of their latest 10-K filings.

Steve Madden (NASDAQ:SHOO) and Deckers Outdoor (NASDAQ:DECK) immediately stand out as outliers, but both look more reasonable if you look at trailing-12-months free cash flow numbers and at their historical free cash flow numbers of the past few years. On the flip side, Timberland (NYSE:TBL) and WolverineWorld Wide (NYSE:WWW) look relatively cheap. Another company, not included in the table, with a valuation similar to that of Timberland and Wolverine is Stride Rite (NYSE:SRR).

Company FCF/Share Price /FCF EV/FCF*
Timberland $2.02 17.2 15.0
Steve Madden $0.31 73.4 66.4
Wolverine World Wide $1.40 15.8 15.4
Deckers Outdoor $0.38 68.1 65.9
*Enterprise value; o perating leases not included

Trying on some new kicks
Of the group, I'm most interested in Timberland, because of its recent dip caused by a slow quarter and the disappointing near-term forward guidance given. Timberland is not a particularly fast-growing company at this stage, but I believe its strong free cash flow characteristics are intact and that management will continue its history of buying back shares at what I believe are attractive prices.

Given the company's consistent free cash flow, I also believe that my colleague, Tim Hanson, hit the nail on the head recently when he included Timberland in a list of companies that are likely to pay a dividend simply because they have more than enough capability to do so. Although the size of the dividend is limited by the company's credit agreement, Timberland is an interesting opportunity for an Income Investor who likes to dabble in companies that have the potential to begin a payout.

While it's true that Timberland has historically traded at even lower multiples than where it is today, my largest concern is with the company's dual-share structure that allows the founding family to maintain control of the company despite whatever poor decisions may come down the road. There hasn't been a large problem to date, but there isn't much of a safeguard in place for holders of common shares.

Foolish final words
While this is a good time to look at Timberland, I think all four companies are worth following because of the free cash flow consistency and history of rewarding shareholders with share repurchases and dividends.

Deckers Outdoor is a Motley Fool Hidden Gems selection.NathanParmelee has no financial interest in any of the companies mentioned. You can view his profile here. The Motley Fool has an ironclad disclosure policy.