Why Would You Buy These 7 Stocks?

Karma police, arrest this man
He talks in maths
-- Radiohead, "Karma Police"

Numbers never tell the whole story. Following your investments (or selecting them) based on nothing but earnings figures and revenue trends probably won't get you in much trouble, because it's the safe way to go. But you'll miss lots of juicy opportunities that way.

Lead by example
Let me explain what I mean. Sticking to companies with proven financial stability and business success is likely to preserve your wealth and maybe net some nice dividends along the way. That's great, and we have a Foolish service for investors of that ilk. But it's not my style, and for good reason.

Sneak a peek at my portfolio, if you will:

These are seven of the 24 individual stocks I'm happy to own today. Irish drug developer Elan (which more than doubled in three years) and robot-assisted surgery specialist Intuitive Surgical (which tripled in two) are my two most profitable holdings, while Buffalo Wild is my worst performer after about a 40% slide in eight scant months. The others fall somewhere in between.

Wait a minute -- I just said I'm happy to own B-Dub, though it's a big loser on my personal scorecard! Universal and Elan don't even make a profit -- and Elan must be ridiculously overvalued after a run like that based on empty coffers. You're nuts, Anders! What gives?

The common denominator
All of these real-money stock picks have one thing in common: I didn't pay up for a stake in them because their numbers looked so great. Sure, search giant Google and Internet traffic slinger Akamai have both the profits and the growth to impress, but that was never their raison d'etre. Here's the play-by-play:

• Akamai makes money when the global thirst for Internet bandwidth and Web server capacity exceeds the available supply. Given the sudden popularity of high-bandwidth applications like online video and Web 2.0 technologies, I believe that Akamai will make a mint for at least the next five years.
• Buffalo isn't the fastest-growing restaurant chain out there, nor the biggest or the most profitable. But that's exactly the point. A stellar management team has thought long and hard about how to expand without hurting the brand or the business in the long run, and that plan is chugging along exactly to spec.
• Internet search and online advertising can't keep Google growing at this breakneck pace forever -- but it doesn't need to. The company is applying the lessons learned online to traditional media like radio, TV, and print advertising, and Google will claim a bigger slice of our attention (and advertisers' money) in the years to come.
• High expectations for Elan's multiple sclerosis drug Tysabri are already reflected in the share price. I'm holding on because the prescription is extending into other patient populations, such as those who suffer from Crohn's disease, and there are other promising products in the company's pipeline as well.
• Intuitive Surgical simply doesn't have any real competition. It stands alone in a fortress of patent protection, providing unique health-care improvements at exactly the right time in history. If the big boys want what Intuitive Surgical's got, they pretty much have to buy the company.
• Universal Display does basic research for next-generation lighting and digital displays that may make the current LCDs, plasma screens, and even incandescent light bulbs obsolete within a decade or so. The commercial applications are just now starting to show up in stores.
• Netflix revolutionized movie rentals 10 years ago on the back of the new DVD format. Now that we're about to shift into the downloading era, Netflix is once again in the vanguard and could very well rewind and replay that success story on a grander scale.

This is what you get
Notice how the rationales above are devoid of math and financial metrics. To my mind, all of these companies are in a developmental stage that falls outside the traditional rules of valuation and dependable profits. Let them fulfill their respective promises or die trying. I'm in no hurry to see results -- that comes later, when the kids are all grown up.

With a truly long-term investing horizon, I believe this is the secret to making money in the stock market: Know the real story. Don't talk in maths.

Further Foolishness:

• Buffett Turned on by Google
• Stocks You Wish You'd Bought
• 4 Stocks Approaching Greatness