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 160,000 members of the Motley Fool CAPS investor intelligence community, to see which ones might have the best chance of outperforming the market.


Levered FCF 5-Year CAGR, %

CAPS Rating (out of 5)

Mesabi Trust (NYSE: MSB)



NCI Building Systems (NYSE: NCS)



Novatel Wireless (Nasdaq: NVTL)



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.

A sizzling opportunity?
If anyone knows anything about trusts it's that they tend to pay out superlative dividends. Hugoton Royalty Trust yields 12% while Penn West Energy (NYSE: PWE) is 9.4%. That's just their nature; they were created to pay out cash in exchange for favorable tax treatment. But Penn West Energy and other Canadian Royal Trusts, or Canroys as they're known, like Precision Drilling Trust (NYSE: PDS) won't be the same after they convert to a growth stock model in response to changes in Canadian tax laws. Investors will need to look toward other such investments for their payouts.

U.S.-based Mesabi Trust doesn't have the same high yield some of its counterparts display (Mesabi's currently yielding 2.5%), but it's linkage to rich iron ore deposits makes it an interesting play nonetheless. It's dependent on Northshore Mining, a subsidiary of Cliffs Natural Resources (NYSE: CLF), for the actual mining of the ore, so royalties received can fluctuate wildly depending on demand from Cliffs' customers. Yet with industrial activity on the rise, payments to Mesabi should grow, and the dividend should rise, too. Cliffs recently boosted its own dividend 60% because the outlook for generating excess cash flows has sustained a substantial rebound due to demand for steelmaking raw materials.

CAPS member drey72 was expecting just such a turnaround earlier this year when he figured Mesabi's dividend would be more consistent:

Increased demand for iron ore from this steady source in MINNESOTA keeps this dividend coming! 

The head of the class
It's not a trust, but investors in NCI Building Systems ought to benefit from the same conditions pushing Mesabi and Cliffs higher. After completing a 1-for-5 reverse stock split to prop up its beaten down stock, the metals manufacturing and marketing specialist to the residential and commercial real estate industries is seeing better demand for its products.

While there looks to be more risk surrounding NCI because of the precarious state of the construction industry, CAPS member DebtFreeBlogger believes it will recover with the economy, pointing out earlier this year that it retains an excellent management team:

NCS has averted bankruptcy and is poised to make a strong comeback. They secured 250 Million from a recognized investment firm in exchange for a 68.5% equity in the company. Moreover, the management is solid and they will be able the level of production has not fallen off. Once the economy significantly rebounds, this stock will too. My 3-5 year estimate of this stock will be $35.00-$40.00 per share. Enjoy the ride.

Coming untied
The market is misreading the potential for how connected we want to be. Sure Novatel Wireless is seeing increased competition from Sierra Wireless (Nasdaq: SWIR) for its MiFi mobile hotspot business, but that says to me this will be a much bigger market than currently exists. The big wireless carriers are building out their support networks and there will be plenty of opportunities for both to capitalize on it, changing these "losers" into winners.

With some pretty hefty cash totals on its balance sheet that narrow the gap between what it trades at and its cash per share, it's understandable that CAPS member Clint35 is intrigued by its potential:

I find what the company does very interesting. Small and pretty cheap on a price per share basis. Lots of cash on the balance sheet.

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 other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.