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 them to mask a company's true operations. Yet the 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-Year CAGR, %

CAPS Rating (out of 5)

Aetna (NYSE:AET)



Baker Hughes (NYSE:BHI)



Baxter International (NYSE:BAX)



DR Horton (NYSE:DHI)






Sources: 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.

Because of Google's search-ad dominance,  a potential merger between rivals Microsoft (NASDAQ:MSFT) and Yahoo! (NASDAQ:YHOO) still gets discussed, like a long-lost paramour you just can't forget. Google owns 75% of the market, and while combining its two rivals together wouldn’t make much of a dent in the tally, it would provide a stronger competitive presence that advertisers just might find attractive.

Top-rated CAPS All-Star member pimpie finds the argument regarding ad search to be a compelling one, but considers Google an innovator in other areas as well:

As big businesses fail under the pressure for change, new small businesses will fill the void, making more Americans bosses then ever before. Count on these new businesses to use online advertising, Google Checkout, YouTube, maps, etc. for managing and promoting their businesses. So much innovation from one company that knows everything and has a slogan 'don't be evil'. Gotta love the GOOG!

Ring the register
Perhaps some investors view the big jump in new home sales in December as a hopeful sign that the housing industry is ready to emerge from its slump. While homebuilders have been slowly building up their cash positions, CAPS All-Star floridabuilder2 thinks the debt burden at DR Horton is just too heavy to bear:

Close to a billion in deb maturities due in the next 2 years. In a period when you can't refinance debt and when you do its extremely expensive you should be looking at debt maturities first on any 10Q. If you are not you are an idiot.

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. 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 rolling in the dough.

Microsoft is a Motley Fool Inside Value recommendation. Google is a Rule Breakers selection. Try any of our Foolish newsletters today, free for 30 days.

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.