Everyone would love to find the perfect stock. But will you ever really find a stock that gives you everything you could possibly want?

One thing's for sure: If you don't look, you'll never find truly great investments. So let's first take a look at what you'd want to see from a perfect stock, and then decide whether TD AMERITRADE (Nasdaq: AMTD) fits the bill.

The quest for perfection
When you're looking for great stocks, you have to do your due diligence. It's not enough to rely on a single measure, because a stock that looks great based on one factor may turn out to be horrible in other ways. The best stocks, however, excel in many different areas, which all come together to make up a very attractive picture.

Some of the most basic yet important things to look for in a stock are:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales don't mean anything if a company can't turn them into profits. Strong margins ensure a company is able to turn revenue into profit.
  • Balance sheet. Debt-laden companies have banks and bondholders competing with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Companies need to be able to turn their resources into profitable business opportunities. Return on equity helps measure how well a company is finding those opportunities.
  • Valuation. You can't afford to pay too much for even the best companies. Earnings multiples are simple, but using normalized figures gives you a sense of how valuation fits into a longer-term context.
  • Dividends. Investors are demanding tangible proof of profits, and there's nothing more tangible than getting a check every three months. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at TD AMERITRADE:

Factor What We Want to See Actual Pass or Fail?
Growth 5-Year Annual Revenue Growth > 15% 20.2% pass
  1-Year Revenue Growth > 12% 6.2% fail
Margins Gross Margin > 35% 96.4% pass
  Net Margin > 15% 23.5% pass
Balance Sheet Debt to Equity < 50% 34.5% pass
  Current Ratio > 1.3 1.18 fail
Opportunities Return on Equity > 15% 16.2% pass
Valuation Normalized P/E < 20 18.21 pass
Dividends Current Yield > 2% 1.2% fail
  5-Year Dividend Growth > 10% NM pass
  Total Score   7 out of 10

Source: Capital IQ, a division of Standard and Poor's. NM = not meaningful; TD AMERITRADE started paying a regular dividend in Oct. 2010. Total score = number of passes.

TD AMERITRADE's score of 7 is pretty impressive. As the online broker industry engages in a vicious price war, TD AMERITRADE has carved out a nice position for itself.

For a while, it appeared that TD AMERITRADE was falling behind the times. Schwab (NYSE: SCHW), Fidelity, and Vanguard all offered competing price cuts, slashing commissions on stock trades and offering ETFs trading on certain funds at no commission. But TD AMERITRADE answered by making more than 100 ETFs available to investors, custom-picked by Morningstar (Nasdaq: MORN) as appropriate components to help any investor create a strong portfolio.

The company also surprised some by announcing plans to start paying a regular dividend. At $0.05 per share, it's not a huge deal, but it does seem to make it less likely that the broker is planning to make a bid to purchase E*TRADE Financial (Nasdaq: ETFC) or another rival broker.

Long-term investors can't be too happy with the stock's performance, which has been pretty much flat since 2005. But TD AMERITRADE has done well in a tough industry, and with some help from the financial markets, the broker could well get even closer to perfect in the months and years to come.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

Click here to add TD AMERITRADE to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. Morningstar and Charles Schwab are Motley Fool Stock Advisor picks. The Fool owns shares of Morningstar. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.