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.

PetroKazakhstan (NYSE:PKZ)
Calgary , Canada
52-week high-low: $24.79-$46.92
$3.085 billion market cap

By Bill Mann (TMF Otter)

We're talking oil. Or as they call it in southern Virginia, "erl."

In the past few years, as worldwide demand for oil has risen and the stability of many of the largest oil producers has remained an open question, many of the biggest consumer countries have sought alternate sources. Trouble is, there seems to be a nearly 1:1 correlation between the prevalence of oil in a country and its level of instability. Worried about Saudi or Iraqi sources? Well, next on the list are places such as Nigeria, Venezuela, and Louisiana -- hardly the models of smoothly functioning societies.

(OK, just kidding, Louisiana.)

And where China has been a longtime exporter of oil, its big producers, PetroChina (NYSE:PTR) and CNOOC (NYSE:CEO), no longer produce enough to meet the country's burgeoning demand. So China has looked elsewhere. And one thing it hit upon was that its neighbor Kazakhstan is relatively stable and absolutely floating on underdeveloped oil fields. So last year, China and Kazakhstan agreed to construct an oil pipeline connecting the two nations, thus giving Kazakh oil and gas easy access to one of the world's largest and fastest-growing markets.

Now, a Kazakh oil company isn't necessarily the world's lowest-risk investment. Fortunately, PetroKazakhstan isn't Kazakh, as the name implies -- it's Canadian, based in Calgary. This means that though PetroKazakhstan operates in a country where commercial codes are at best fluid, its responsibility to investors falls under the definitively First-World Canadian securities laws.

But the combination of nervousness about long-term oil prices and the political situation in Kazakhstan has kept investor enthusiasm regarding PetroKazakhstan quite low: It currently trades at a price-to-earnings multiple just north of 6, and it pays out a dividend at a 1.5% yield. This price discounts a large number of things: political turmoil, dramatically lower oil prices, and maximized oil fields specifically related to PetroKazakhstan. Yep, the risk of all three exists, but the discount is way, way overdone.

Build in the potential that Kazakh oil in general will become substantially more marketable given a reduction in transportation costs, and its position as a potential low-cost source for China, and you've got the makings of an investment where much can go wrong and it will still be quite right.

Bill Mann holds shares in PetroKazakhstan, as he has for several years.

Corbevoie , France
52-week high-low: $88.30-$122.75
$152.7 billion market cap

By Mathew Emmert (TMF Gambit)

Try as I might to find something I don't like about this company, I just can't do it. Total SA is third among the oil majors in terms of market capitalization, but it's No. 1 when it comes to which one you'll want to own.

This oil giant is well-diversified, with operations in more than 120 nations and sales evenly spaced throughout the world's developed countries. It generates a massive $14.6 billion in free cash flow, which it uses to repurchase boatloads of stock and support its sizable 3.2% dividend yield. And over the past several years, it has flat-out spanked the pants off of every other oil major in terms of operating performance.

Total SA has had the best earnings-per-share performance of all the super-majors since 2000. It's also expecting 4% annual production volume growth through 2007, a figure that sits well above the targets that most of its peers have set. Finally, there's the matter of "finding costs" -- how much a firm spends to discover oil and gas reserves. Total has some of the lowest finding costs in the business.

The balance sheet couldn't be in better shape, with debt to total capitalization recently falling below 20%. Better still, the dividend has nearly doubled over the past four years, yet the payout ratio remains just 37%. Indeed, Total is likely to have one of the highest dividend growth rates of all my Motley Fool Income Investor recommendations, and that means that today's buyers will be locking in much higher future yields.

I really like the direction of this oil and gas conglomerate. It has made outstanding progress bringing together some very strong oil and gas brands over the years, and it's growing intelligently and returning more value to shareholders via dividends and stock buybacks than any other major is doing.

With capital expenditures falling and profitability rising, Total seems to be promising a bright future for its shareholders. Even if oil prices return to the low $30s, I can't justify a valuation below $119 per share. The bottom line is that its extensive reserves and shareholder-friendly approach make this quality oil titan an excellent holding -- the total package, if you will.

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

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