The following article is part of The Motley Fool's "Stock Madness 2005," a contest based loosely on the annual NCAA College Basketball Tournament, a.k.a. March Madness. From March 17 to April 4, our writers and analysts will engage in head-to-head competition with each other, advocating and arguing on behalf of 64 stocks we've selected as among the most interesting to Foolish investors. You, dear readers, are the fans and referees -- you'll read these exciting duels and then vote for the stock you think is the better investment... and should therefore move on to the next round of play. The company that survives six "games" will be our tournament champion, and its writer our most valuable "coach."

But, please, make no mistake -- "Stock Madness 2005" is a GAME!

Our writers are doing this for fun. They are enjoying the spirit of competition and the art of debate. They are delighting in the search for positives in the companies they've drawn.and negatives in the companies they're pitted against. They are NOT necessarily recommending these stocks as the ones they believe in above all others. As ever, YOU must decide whether the stocks we're writing about -- winners and losers -- are deserving of your investment dollars.

Cooper Companies (NYSE:COO)
Pleasanton , Calif.
52-week high-low: $49.62-$84.70
$3.6 billion market cap

By James Early

You can talk all you want about valuation, but to make any investment work for a sustainable period of time, you need sustainable sales growth, something you won't find in flatlined Diageo, a British-based boozery. I really needn't go further. But I will.

Institutions -- the smart money -- seem to abhor the stock: It sports a meager 8.3% institutional ownership versus 95.2% for my company, contact lens and ob-gyn surgical device maker Cooper Companies.

Despite occasional negative press about them, Wall Street analysts, studies have shown, do in fact tend to pick correctly. While they rate Cooper a moderate buy, Diageo can muster only a polite hold. Sure, Diageo, which reported disappointing revenue and profit results most recently, sells at less than half Cooper's price-to-earnings ratio, but would you pay even $500 for a broken school bus -- or one that went only five miles per hour?

Cooper's not the sort of company that comes cheap. I remember looking at it in the low $30s, before it steadily climbed to its $80-plus perch now. Folks, these results speak to a management that's as rock solid as can be. It's a rare management that can successfully grow both organically and through acquisition, and Cooper has done exactly that, steering clear of outlandish promises in the meantime.

And what about that all-important top-line growth? Cooper has it in spades, averaging 24.3% annually over the past five years. While Diageo's no time bomb, it's a cold steak with no sizzle. Cooper Companies, meanwhile, has enough untapped potential to feed its growth for years to come.

James Early owns no shares discussed in this article.

Diageo (NYSE:DEO)
London , U.K.
Price: $57.86
52-week high-low: $48.21-$58.96
$43.5 billion market cap

By Mathew Emmert (TMF Gambit)

OK, leave it to me to be the guy who writes about both cigarettes and liquor in the same competition. My mother would be so proud -- well, she would be if she had a "Born to Lose" tattoo on her chest. But I digress.

Diageo is a global spirits business that has been streamlining its brand and distribution structure over the past few years to great success. It's now a cash flow machine with a lot of potential for paying out big dividends and implementing share buybacks.

The company dominates its high-margin industry, boasting more top 20 brands than its next five competitors combined. After playing a little hardball over the past couple of years, Diageo got its distributors to sign exclusive distribution deals with it, giving the liquor giant a virtual monopoly in many regions.

Liquor is one of those evergreen businesses that just keep turning out the greenbacks year after year. Folks simply don't care much about economic weakness when it comes to making this purchase. In fact, in a bad economy, or during significantly stressful global events, liquor sales have been known to increase as people try to drown their sorrows and settle their nerves. That makes this firm a nice portfolio hedge against rising interest rates and weak economic cycles.

In the end, we're looking at a predictable profit machine with a proven history of distributing its hoard to shareholders -- you need look no further than the current 3.4% yield to see that. Of course, these are all reasons that I recommended shares of Diageo in the pages of my dividend newsletter, Motley Fool Income Investor, back in April 2004.

I currently value the shares at $63, meaning there's plenty of material value left for long-term investors. Is there really a decision to be made here? I mean, it's possible that Cooper's contacts could help you see a bit better after you've partaken of a few Diageo products, but I'm still pulling for the king of booze.

Mathew Emmert owns no shares of companies mentioned in this obviously superior write-up.

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