3 Kings of Cash

Just flip on the TV, and there's a good chance you'll soon find yourself watching an entertaining get-rich-quick stock scheme being advertised. You know, the ones that promise overnight wealth through the use of red-light/green-light trading systems, highly-leveraged options "investing," or even extremely leveraged foreign exchange trading.

Sounds like a no-lose situation right? Not so fast, Fool!

No matter how anyone advises you to slice it, dice it, or trade it, the soundest way to beat any market is to own high-quality stocks that actually produce cash -- the lifeblood of every business.

A Fool's guide to free cash
After all, investing 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 firm's profitability (or lack thereof). You can learn more about the importance of free cash flow here.

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

I'll simply screen for companies with free cash flow-to-sales margins above 15% (also known as the cash king margin) that have also earned overwhelmingly bullish opinions from our community. The Cash King Margin is a good way to account for size differences among companies, rather than just using an absolute level of free cash flow.

Cash Kings rule
Unlike a company such as WorldSpace (NASDAQ:WRSP), which has cash gushing out of its corporate windows, these companies have it practically flooding into the mail rooms.

So let's not waste another second. Sound the trumpets! Here's another trio of Cash Kings from CAPS:

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

Just for starters, here's a quick summary of the stories behind these cash-throwing kings, and what some of our CAPS players think of them.

King L(in)ear
With a whopping free cash flow-to-sales margin of more than 35%, Linear Technology takes the honors as this week's most prolific cash king. As one of the leading suppliers of high-end linear integrated circuits, Linear has the price stability, product, geographic diversity (more than 70% of its sales originate outside the U.S.), and relatively smaller capital requirements to keep its fortress flush with cash.

CAPS player reinhs also trumpets Linear's management team, who always seem to have an unwavering focus on profitability and shareholder-friendly actions:

"This is a great semiconductor company with some of the best margins in the business. They have close to $2B in cash, no debt, pay a good dividend and aren't diluting shares, but reducing them. This is simply a well run company that makes heaps of cash in an efficient way."

Broad shoulders
Broadcom is another free cash flow king, using superior tech savvy and a diverse product line to lead the high-performance semiconductor industry. Specifically, Broadcom offers integrated solutions -- which lowers system costs for customers such as Apple (NASDAQ:AAPL), Cisco Systems (NASDAQ:CSCO), and EchoStar (NASDAQ:DISH) -- in order to generate superior returns and free cash flow.

Despite a few balance-sheet and options-backdating concerns with Broadcom, CAPS All-Star weiwentg is staying loyal to its long-term investment merit:

"Broadcom is one of the viable companies left after the Internet bubble burst. It has competitive advantages and no debt. The last results statement indicated that inventories were building, and that they were restating financial results in light of options issues. The latter is unfortunate, and hopefully the responsible person will be punished, but they should be temporary issues."

Stray no further
Our last free cash flow king this week is Strayer Education, one of the most highly regarded for-profit, postsecondary education companies in the U.S. With the high barriers to entry posed by accreditation, Strayer's convenient online-course alternatives, and a huge market of American adults without postsecondary degrees, this king should be spreading his teachings for many years to come.

It's that type of reputation, highly-profitable business model, and market opportunity that makes our CAPS community wise to Strayer's prospects. Robert628496 is one of many CAPS players who've done their homework:

"I believe that the future of degree programs for working adults resides in the for-profit sector. In my view, Strayer is beautifully positioned, in terms of their product, their management, and their business operation to ride this rocket to great heights."

The Foolish bottom line
Free cash flow-generating companies like Linear Technology, Broadcom, and Strayer Education 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, read what fellow Fools think, and even voice your own opinion about your favorite stocks. Click here to join the forward-thinking CAPS community free of charge.

Be sure to join us next week, when I'll feature three more cash kings from CAPS. Until then, may your cash flow always flow free.

Foolish contributor Brian Pacampara exercises all of his options at the buffet table only. He holds no position in any of the companies mentioned. The Fool's disclosure policy is the strict set of rules that always rules Fools.