Along with life changes come opportunities to discover new worlds -- and for investors, new companies in which to invest. Once I bought a house, I came to fully appreciate all the fuss over Home Depot (NYSE:HD) and its potential. After I became an aunt, my eyes were opened to the world of day-care centers.

Once my nieces arrived on the scene, my sister and brother-in-law began looking into which day-care center would be best for their twins. They settled on Bright Horizons Family Solutions (NASDAQ:BFAM). I've since visited the center many times, and have been impressed by the staff and setup. Better still, I discovered that Bright Horizons was a public company.

Founded in 1986 and based in Watertown, Mass., it's "the world's leading provider of employer-sponsored child care, early education and work/life solutions." The firm has a market capitalization of about $500 million, and employs 15,000 people.

Here's a rundown of my initial findings on the company. I'm not yet a shareholder, but perhaps I will be, one day. And perhaps you will, too.

The upside
There are many reasons to like this company. For example:

  • The demand. Society is not likely to run out of urchins who need a place to be cared for while mommy and/or daddy are at work. There are always new ones being born, and I don't see the trend of Americans working longer hours reversing itself anytime soon.

  • The business model. Bright Horizons isn't just a neighborhood day care. It operates nearly 500 child-care centers in the United States, Canada, Europe, and the Pacific Rim, most of which were set up to serve specific corporations, hospitals, universities, and government agencies. A BusinessWeekarticle listing the firm as one of the 100 hot growth companies of 2002 described it as "Providing the Killer Perk." That it does, as it permits employers to retain employees by providing something extremely valuable: high-quality on-site (or near-site) child care.

    Its 400-plus corporate clients include 88 of the Fortune 500. Some clients are: Amgen (NASDAQ:AMGN), AOL Time Warner (NYSE:AOL), Boeing (NYSE:BA), Cisco Systems (NASDAQ:CSCO), Citigroup (NYSE:C), Duke University, IBM (NYSE:IBM), The International Monetary Fund, Johnson & Johnson (NYSE:JNJ), Mattel (NYSE:MAT), Merck (NYSE:MRK), Microsoft (NASDAQ:MSFT), The New York Presbyterian Hospital, Paramount Pictures, Staples (NASDAQ:SPLS), Sun Microsystems (NASDAQ:SUNW), Warner Brothers, and Xerox (NYSE:XRX).

  • The details. When Bright Horizons strikes a deal with a corporation, it has the firm supply the facility. This saves Bright Horizons a lot of money, permitting it to pay its employees significantly more than the going rate. This, coupled with benefits well above the norm in the child-care world, leads to low turnover and greater dedication in the staff -- which is a big boon for the children being cared for. Bright Horizons has repeatedly been named as one of Fortune magazine's "100 Best Companies to Work for in America."

  • The growth and profitability. Another great thing about the company is that it isn't standing still. Revenues in 2002 came in at $408 million, roughly twice 1998 levels. (That's 18% growth, annualized.) Net income totaled $15.3 million in 2002, up from just half a million in 1998. (That's whopping growth, a 30-fold increase in four years.) Gross margins held steady at 14.7% in 2000-2002, while net profit margins rose from 3.16% to 3.76%. Long-term debt is low at $380,000 and fell significantly between 2001 and 2002, while cash and cash equivalents more than doubled to $28 million.

  • The mission. Bright Horizon's mission statement includes six goals. Some are what you might expect, such as "Nurture each child's unique qualities and potential." But there's also "Grow a financially strong organization." I like seeing that because it conveys both an imperative to grow and a dedication to financial health. For most investors, neither of those is enough on its own, but together they're compelling.

  • The management. Not only does management have impressive backgrounds, but there are also a lot of women in top positions. That's nowhere near a deal maker or breaker for me, but it's encouraging to see. One of the co-founders is Linda Mason, currently serving as chairman, while the president and COO is Mary Ann Tocio and the CFO is Elizabeth Boland.

  • The heart. Bright Horizons isn't purely about profit. It's also involved in initiatives such as Bright Spaces, where it builds children's playrooms in homeless shelters.

  • The future. Based on my admittedly not-in-depth review, this company appears to be firing on all cylinders. Given that it seems to have a winning formula and capable management, I see a lot of room for growth. There's a wide world out there, with millions of parents seeking good child care.

The downside
As all public companies do, Bright Horizons lists the main risks faced by its business in its annual 10-K filing with the Securities and Exchange Commission. Here are a few examples:

  • Management of growth. The firm has been growing like gangbusters over the past years and is expected to continue growing briskly, but this has to be managed effectively.

  • Market acceptance of work and family services. If companies stop seeing the value in what Bright Horizons offers, then growth could slow -- or business could shrivel up entirely.

  • Competition. Bright Horizons isn't operating in a vacuum, and it must compete with other firms. (But note that it's some four times larger than its nearest competitor -- this is the 800-pound gorilla in the day-care biz.)

  • Changing economic conditions. Economic difficulties could threaten the income that Bright Horizons expects from its clients. (Though note that the firm has been thriving in the past few years, which haven't exactly been terrific, economically.)

  • Impact of governmental regulation. If new laws were to require costly changes in the way child-care centers are run, this would threaten Bright Horizons' profitability.

Despite all the risks mentioned above, the main downside is the stock price. At about $40 per share and with a price-to-earnings ratio of around 30, it's not exactly a screaming bargain. Then again, it's not outrageously overpriced, either. You may want to see whether the stock drops to a more attractive level. Or perhaps begin researching it more thoroughly now.

Meanwhile, share your thoughts on our Bright Horizons discussion board. If you're not already a participant in our discussion board community, take advantage of a painless free trial, to see what all the fuss is about.

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There was no Bright Horizons when Selena was young. She attended Roberta Wood's nursery school, instead. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools.