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 it 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 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 125,000 members of the Motley Fool CAPS investor intelligence community, to see which ones might have the best chance of outperforming the market.

Over the first 20 months since CAPS began tracking the data, four-star stocks have outperformed the market by more than seven percentage points, while five-star stocks did even better. Keeping an eye on these top stocks might signal your best opportunity to capture those gains.


Levered FCF
5-Yr CAGR, %

CAPS Rating
(5 stars max.)

Temple-Inland (NYSE:TIN)



Joy Global (NASDAQ:JOYG)



Western Digital (NYSE:WDC)



R.R. Donnelley & Sons (NYSE:RRD)



Northrop Grumman (NYSE:NOC)



Source: Capital IQ, a division of Standard & Poor's; 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.

Publishing is a tough business to be in these days. Newspapers like the New York Times (NYSE:NYT) seem on the brink of bankruptcy, Yet not all publishers feel the pinch equally. R.R. Donnelley & Sons, for example, a publisher of magazines, catalogs, books and directories, has been hanging on better than most, though it's not immune to the recession. Revenue in the last quarter, for example, fell less than 2% to $2.9 billion.

CAPS member Eulogistics figures that with its long history and ability to win important contracts, R.R. Donnelley should be able to survive: "Good company with a solid balance sheet. Been in the business a long time and they just picked up a new contract with a textbook publisher. Decent dividend too."

Ring the register
The growing buzz about solid-state drives such as those produced by STEC (NASDAQ:STEC) is that they're faster then traditional mechanical drives. There seems to be a growing consensus that both falling prices and increasing reliability will soon make them a viable, mass producted alternative. Yet that doesn't seem to concern Western Digital all that much, since it says it may enter the field itself -- or not. It wants to find the right vehicle to drive ahead.

That sort of insouciance would probably disturb top-rated CAPS All-Star mpapile, who views mechanical drives as a relic of the past.

Mechanical hard drives are going the way of the dinosaur. Storage has been the bottleneck in computing for years, but now SSD drives are plummeting in price, and will be mass market by next year.

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. Why not head over to the completely free CAPS service and let us hear what you've got to say about these or any other stocks that 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.