In the competitive spirit of college basketball's annual championship tournament, The Motley Fool brings you Stock Madness 2007! Our writers are making head-to-head arguments for their chosen stocks (but not necessarily investment recommendations -- this is, after all, a game), and you'll pick the winners with your article recommendations and Motley Fool CAPS ratings. Who will win the right to cut down the net? Let's tip things off and find out!

In the words of Mick Jagger, "please allow me to introduce myself."

After destroyingopposingteams from Citigroup (NYSE:C), Microsoft (NASDAQ:MSFT), and Altria (NYSE:MO) over the past two weeks, Chesapeake Energy (NYSE:CHK) coach Philip Durell strained a tendon while working his slide rule last night and has been placed on injured reserve. (Who knew coaching was such dangerous work?) In today's matchup, I'll be filling in for Philip as Chesapeake continues its roll right over Apple (NASDAQ:AAPL).

What's that, you say? Apple can't be beat? Its legions of rabid iFans will vote it through like Sanjaya on American Idol?

Balderdash. Apple is going down like the pony-hawked poseur that it is. Here's why Chesapeake eats Apple's lunch. As Philip has already described, this gas-fired powerhouse:

  • Sells for approximately $0.60 per dollar of intrinsic value.
  • Focuses its operations within a single geographic region, concentrating its wells in Texas, Oklahoma, and Louisiana so as to minimize distribution and operational costs.
  • Has spent billions of dollars buying up primo natural-gas assets over the past few years. So if you buy the company now, you're getting in just as Chesapeake begins to monetize those investments to turn them into profits.
  • With natural-gas futures trading for $7.50 on the NYMEX today, and for as much as $9.20 further out, Chesapeake's stock in trade looks likely to get wildly more valuable as time goes by.
  • Even the $9 price could prove conservative as demand for gas grows, domestic supply dwindles, and N.I.M.B.Y. sentiment along the U.S. coastal states prevents the building of facilities to bring in liquefied natural gas to sate our demand.

To those arguments, I'd add a few of my own:

  • Trading for just past seven times trailing earnings, Chesapeake is better than four times as cheap as Apple.
  • With a profit margin of 27%, Chesapeake is more than twice as profitable.
  • Chesapeake's CEO puts his money where his mouth is, spending $165 million over the past 18 months in anticipation of profiting right along side you.
  • In contrast, Apple insiders have been tossing their shares as if they were worm-infested. From Anthony Fadell to Ronald Johnson to Bertrand Serlet to Philip Schiller to Nancy Heinen, Apple's senior VPs have been net sellers over the past year, unloading shares for as little as $56 a pop, and selling off 50% of their holdings in just the past six months.

When comparing the two companies, and deciding which makes for the better investment, you really have to ask yourself just four questions:

  1. Is a P/E of 7 cheaper than a P/E of 34?
  2. Is a profit margin of 27% better than a profit margin of 12%?
  3. Do Apple insiders know something you don't? (And does Chesapeake's CEO know something you do?)
  4. Does Blake sing better than Sanjaya?

If you answer "yes" to these questions, then you must vote for Chesapeake and send Apple home.

Read our opposing entry on Apple, and see all of our articles in the tournament.

Think you could pitch your favorite stock -- or ditch your least favorite -- in 27 seconds or less? That's what we're doing over at Motley Fool CAPS. Check out our new stock videos.

Fool contributor Rich Smith has no position, short or long, in any company mentioned in this article. He can be reached at WriteRich@gmail.com.

Microsoft and Chesapeake are Motley Fool Inside Value picks. So before buying, do your homework, and review The Motley Fool's superbly sportsmanlike disclosure policy.