9 Companies With Good Cash Flow

Solid businesses to invest in will be able to show you the money.

Editor's note: This column has been updated since its original publication in the August issue of Kiplinger's Personal Finance magazine.

If you own a small business—say, a dry-cleaning service—your goal is to put as many dollars in your pocket as you can. You define profits as the cash you keep, not numbers on a page that fit a set of government-mandated accounting rules. Now consider an investor who buys stock in a publicly traded company. She’s just as much an owner as you are the proprietor of the dry-cleaning store, but her concern tends to be net income or earnings per share, figures that analysts follow and report on with great drama every quarter. She’s preoccupied with such measures as the relationship between a stock’s price and the company’s earnings per share, or with the amount by which earnings are expected to rise this year compared with last year.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.