Methodology: The companies listed above have five-year annualized cash-flow-per-share growth rates of more than 15%, plus an equally impressive five-year annualized revenue growth rate. Furthermore, analysts expect the earnings per share of each member of this list to grow by 10% or more over the next few years. Each stock on this list also has a price-to-cash-flow ratio of less than 15, and below the average for industry peers in North America.
Why you should care: “Show me the money” isn’t just a motto for game shows or fictional sports stars in Tom Cruise movies. It can also work for picking stocks. Indeed, cash flow is the lifeblood of any business enterprise, which is why the ability to function like a corporate ATM is seen by many savvy investors as a better indication of value than the more widely watched price to-earnings ratio. When it really counted, during the 2008–09 market crash, the Best Cash Flow generators outperformed all our other Investor 500 screens. Collectively, these companies posted the only positive average return (14.3%) among all groups in our 2008–09 market survey.
Worth noting: Last year, members of this list provided an average return of 16.5%. The best 2010 performer was SunOpta, a Toronto region health-products company. It delivered a 77% return—but didn’t make this year’s list. When it comes to 2011 picks, analysts are most bullish on Stantec, an Edmonton-based engineering and architecture company, and Calgary’s Petrobank Energy and Resources, which have mean stock price targets of $32.30 and $32.23 respectively.