When a business has much more capital coming in than going out, it’s a sign that investors can buy shares and sleep well at night. Only a few premier companies truly deserve the title of “cash flow king,” however — and these businesses are definitely worth looking at in 2025.
To identify these cash flow kings, you’ll need to understand the concept of free cash flow (FCF). The mathematical definition of FCF is a company’s operating cash flow minus its capital expenditures.
By knowing a business’ FCF, investors can gauge whether the company’s cash generated from business operations exceeds its capital expenditures, and by how much. Then, you can compare the firm’s FCF to its competitors.
If there’s a clear winner, you’re probably looking at a tried-and-true cash flow king; if it’s a high-quality, well-known blue chip company, that’s even better. Hence, let’s put a couple of famous firms to the test, check their cash flow versus their peers, and consider whether they might deliver robust returns in 2025.
NVIDIA
When artificial intelligence (AI) became a major market theme a couple of years ago, NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) became a darling of the markets. That’s because NVIDIA’s processors were powerful enough to handle AI-intensive workloads.
Fast-forward to 2025, and NVIDIA is still a market darling and a member of the “Magnificent Seven” group of heavily favored mega-cap firms. It’s amazing to consider how NVIDIA ascended so quickly to blue-chip status and stayed there without losing its luster.
Granted, the NVIDIA stock price has wobbled lately, but that’s true for the stock market generally. No matter how you slice it, NVIDIA shares have delivered impressive returns to investors over the past one, two, and five years.
Some skeptics might contend that NVIDIA stock is overvalued or “stretched” to the upside. However, as of April 4, NVIDIA’s trailing 12-month (TTM) price-to-earnings (P/E) ratio was between 34x and 35x.
That’s not an extreme valuation multiple for a chip stock in the 2020s. For comparison, Advanced Micro Devices (NASDAQ:AMD) had a P/E ratio of almost 94x, while Broadcom’s (NASDAQ:AVGO) P/E ratio was around 71x.
Commentators talk about stock price action and valuations all the time. Yet, there’s a key metric that they sometimes overlook: FCF. Remember, if a company’s cash inflow isn’t much greater than its expenditures, there could be a serious problem even if the company is considered a blue-chip.
So, let’s compare NVIDIA with some of its chip-industry rivals. Here’s how NVIDIA matches up against the company’s main U.S.-based competitors in terms of TTM FCF:
- Advanced Micro Devices: $2.405 billion
- Broadcom: $20.734 billion
- Intel (NASDAQ:INTC): -$15.656 billion
- NVIDIA: $60.853 billion
As you can see, there’s really no contest here. NVIDIA’s vastly superior cash flow makes it crystal clear why the company is a market darling and a worthy blue-chip business to invest in today.
Wells Fargo
A new round of earnings reports will kick off soon, and among the earliest reporting companies will be financial-market giant Wells Fargo (NYSE:WFC). All eyes will be on Wells Fargo as it’s a bellwether big bank and a blue-chip among financial firms.
Like NVIDIA stock and many others, Wells Fargo stock has experienced some volatility recently. Still, the long-term trend is to the upside as Wells Fargo’s shareholders have enjoyed nearly 150% returns on their investment over the past five years.
There are other reasons to view Wells Fargo as a blue-chip of choice for selective investors. For example, passive income investors should be glad to know that Wells Fargo delivers an enticing forward annual dividend yield of 2.44%.
Value hunters should also check out Wells Fargo. Indeed, the company’s TTM P/E ratio of 12.23x suggests that there’s a bargain here.
Is Wells Fargo a cash flow king, though? Let’s see what the numbers tell us. Here’s the TTM FCF for Wells Fargo and some of its famous peers in the banking sector:
- Bank of America (NYSE:BAC): -$8.805 billion
- Citigroup (NYSE:C): -$26.169 billion
- JPMorgan Chase (NYSE:JPM): -$42.012 billion
- Wells Fargo: $3.035 billion
Sometimes, being “not negative” is a positive. During these challenging times, Wells Fargo stands out from the pack with its positive FCF.
Having comparatively strong cash flow can put blue-chip businesses like NVIDIA and Wells Fargo in a good position to deliver value to the shareholders. With that in mind, feel free to put a few NVDA and WFC shares in your portfolio and align yourself with a couple of bona fide cash flow kings.
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