16 Companies Growing Cash Flow and Revenue

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Includes: AAPL, ALR, ATHR, BUCY, CELG, HOLX, ICE, INFY, ISRG, LKQ, MELI, NUAN, PCLN, TMUS, WBMD, WPZ
by: Frank J. Constantino

The saying goes "cash is king". However, it would probably be more accurate to say "cash flow is king". Cash flow may be the most reliable measure of what a company is earning. Cash flow is a measure that is not easily manipulated. Free cash flow (FCF) is defined as operating cash flow - capital expenditures. Companies that have high free cash flow levels are often financially healthy companies.

For this article, I have identified sixteen companies that are growing free cash flow at a five year compound annual growth rate (CAGR) of 50% or higher. In addition, I wanted to make sure that these companies were growing revenue as well. I narrowed the list to companies that are growing revenue at a CAGR of 25% or higher. Lastly, I have only included companies with a market cap of at least $3 billion.

Apple (NASDAQ:AAPL)

AAPL
Market Cap $314.6 B
5Year CAGR FCF 62%
5Year CAGR Revenue 36%
Forward P/E 14.84
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Alere Inc. (NYSE:ALR)
ALR
Market Cap $3.3 B
5Year CAGR FCF 95%
5Year CAGR Revenue 39%
Forward P/E 14.51
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Atheros Communications Inc. (NASDAQ:ATHR)
ATHR
Market Cap $3.3 B
5Year CAGR FCF 59%
5Year CAGR Revenue 38%
Forward P/E 20.84
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Bucyrus International Inc. (NASDAQ:BUCY)
BUCY
Market Cap $7.4 B
5Year CAGR FCF 75%
5Year CAGR Revenue 45%
Forward P/E 16.53
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*Bucyrus has agreed to be taken over by Caterpillar (NYSE:CAT)

Celgene Corp (NASDAQ:CELG)
CELG
Market Cap $26.5 B
5Year CAGR FCF 182%
5Year CAGR Revenue 47%
Forward P/E 16.92
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Hologic Inc (NASDAQ:HOLX)
HOLX
Market Cap $5.8 B
5Year CAGR FCF 66%
5Year CAGR Revenue 41%
Forward P/E 18.07
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Infosys Technologies Ltd. (NASDAQ:INFY)
INFY
Market Cap $41.9 B
5Year CAGR FCF 65%
5Year CAGR Revenue 56%
Forward P/E 28.08
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Intercontinental Exchange Inc. (NYSE:ICE)
ICE
Market Cap $8.8 B
5Year CAGR FCF 66%
5Year CAGR Revenue 49%
Forward P/E 18.33
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*Intercontinental Exchange and Nasdaq OMX (NASDAQ:NDAQ) have made a joint offer to buy NYSE Euronext (NYSE:NYX)

Intuitive Surgical Inc. (NASDAQ:ISRG)
ISRG
Market Cap $13.6 B
5Year CAGR FCF 61%
5Year CAGR Revenue 44%
Forward P/E 31.53
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LKQ Corp. (LKQX)

LKQX
Market Cap $3.5 B
5Year CAGR FCF 54%
5Year CAGR Revenue 35%
Forward P/E 17.69
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Mercadolibre Inc. (NASDAQ:MELI)
MELI
Market Cap $3.8 B
5Year CAGR FCF 94%
5Year CAGR Revenue 50%
Forward P/E 52.59
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MetroPCS Communications Inc. (PCS)
PCS
Market Cap $5.8 B
5Year CAGR FCF 111%
5Year CAGR Revenue 31%
Forward P/E 16.37
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Nuance Communications Inc. (NASDAQ:NUAN)
NUAN
Market Cap $5.9 B
5Year CAGR FCF 137%
5Year CAGR Revenue 36%
Forward P/E 14.92
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Priceline.com Inc. (NASDAQ:PCLN)
PCLN
Market Cap $25.4 B
5Year CAGR FCF 71%
5Year CAGR Revenue 26%
Forward P/E 27.86
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WebMD Health Corp (NASDAQ:WBMD)
WBMD
Market Cap $3.1 B
5Year CAGR FCF 54%
5Year CAGR Revenue 27%
Forward P/E 42.72
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Williams Partners L.P. (NYSE:WPZ)
WPZ
Market Cap $15.1 B
5Year CAGR FCF 50%
5Year CAGR Revenue 62%
Forward P/E 15.77
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This search for growing free cash flow and growing revenues yielded 16 names of mostly quality organizations. Although these are not recommendations, there are several names on the list I like. Apple is an obvious favorite for many. The company continues to produce high demand consumer electronics. I also like MetroPCS, as it may become a takeover candidate whether or not the AT&T (NYSE:T) buyout of T-Mobile happens. I am also bullish on Williams Partners. The master limited partnerships pay excellent yields and hold tax advantages. Williams yields 5.42%.

Cash flow is an important metric for any stock evaluation. These companies represent an excellent starting point for further research.

Disclosure: I am long AAPL.