Here at Fool HQ, we get together at the end of the old year and look toward the new one ahead for the some of the best investing opportunities in the stock market. Stocks 2006 marks my first year as part of this annual project, and I can say without reservation that I'm looking forward to being a part of our next annual investing guide. Let me explain why.

Our investment guides are tremendous fun for an analyst, primarily because the underlying philosophy surrounding the product is so simple. There is no pigeonholing. Each analyst is allowed to select the company that he or she believes will perform the best over the next few years or longer. Other than that, the only real restriction is that the selected company's shares must trade on one of the major exchanges and with a reasonable amount of volume. We do attempt to make sure the guides provide a balanced offering of investments for different strategies, but it's the quality of each idea that's paramount.

If it were all just fun and games for us analysts, though, it wouldn't be much of a product. Thankfully, subscribers have found great benefits as well. Over the past five years, $10,000 invested in each year's picks ($50,000 in total) would have yielded a return of $74,800. That is $12,800 more than what would be gained from investing in an S&P 500 fund.

Having received my simple marching orders, I started off with a long list of companies that I considered to be worthy choices, given their current valuations. My list included Polaris (NYSE:PII), PetroChina (NYSE:PTR), Limited Brands (NYSE:LTD), Wal-Mart (NYSE:WMT), Ethan Allen (NYSE:ETH), Buckle (NYSE:BKE), and Japanese consumer products giant Kao. All of them were attractive, based on their existing growth prospects and, in many cases, their dividend yield. Unfortunately, I had to eliminate Kao early on, because its shares trade only on the Pink Sheets and in small volume.

Deciding between the top two
After doing further research and considering which companies had the brightest three to five years in front of them (my personal timeframe of choice), I narrowed the selection down to two companies. Those two companies were Buckle and my Stocks 2006 pick.

Buckle doesn't get a great deal of attention from investors. It's a small retailer, located mostly in the Midwest, that primarily sells recognized brand-name products and augments those products with some private-label merchandise. On the surface, there is nothing tremendously special about the company. However, it is conservatively managed and over the years has performed quite well, regularly turning in double-digit returns on assets and equity while maintaining healthy margins.

But what has really impressed me with Buckle over the years is the way that management has managed its cash flow. The company hasn't grown revenues every year, but it has maintained a steady level of cash performance, and its share count today is lower than it was in 2001. In the last couple of years, the company has also been sharing the cash flow with its shareholders in the form of dividends. The current dividend yield on the shares is about 2.1%.

Making the call
About a week before it was time for each of us to lock in our pick for Stocks 2006, I was still on the fence between Buckle and the company I would ultimately choose. Two things concerned me about Buckle, though, that didn't bother me as much about the company I recommended.

The first factor was valuation. While Buckle is and was attractively valued, its business is a bit more economically sensitive than that of the company I recommended. So while it may be attractive today, a slight decline in sales or earnings is likely to trigger a stronger reaction in the share price.

The second thing was that after a few years of nurturing its smaller businesses, the company I recommended has finally begun to show signs that it is turning the corner, and its smaller businesses will begin to have a material impact on the bottom line. These newer businesses still also have plenty of growth in front of them. In the meantime, the core business is steady, solid producer of cash. Ultimately, it was this second factor that swung me away from Buckle. I believe in the long run that Buckle's management can navigate a dip in the economy.

To purchase Stocks 2006 and read about all of the recommendations -- including mine -- clickhere. We offer the option to purchase Stocks 2006 individually or as free bonus for subscribing to one year ofMotley Fool Stock Advisor.

NathanParmelee beneficially owns shares in his 2006 pick but has no financial interest in any of the other companies mentioned. You can view his profile here. The Motley Fool has an ironclad disclosure policy.