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 140,000 members of the Motley Fool CAPSinvestor intelligence community, to see which ones might have the best chance of outperforming the market.
Company
Levered FCF 5-Year CAGR, %
CAPS Rating (out of 5)
American Capital (Nasdaq: ACAS)
39.5%
****
Apple (Nasdaq: AAPL)
100.3%
***
Harley-Davidson (NYSE: HOG)
50.7%
**
Priceline.com (Nasdaq: PCLN)
60.5%
*
ValueClick Continued...
Rich Duprey is a writer specializing in the stock market.
Be the first to read Rich Duprey's column. Sign up today and receive Townhall.com delivered each morning to your inbox.