Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if CR Bard (Nasdaq: BCR) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • 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 mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. 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 CR Bard.

Factor What We Want to See Actual Pass or Fail?
Growth 5-Year Annual Revenue Growth > 15% 9% Fail
  1-Year Revenue Growth > 12% 7.3% Fail
Margins Gross Margin > 35% 62.5% Pass
  Net Margin > 15% 18.7% Pass
Balance Sheet Debt to Equity < 50% 59.9% Fail
  Current Ratio > 1.3 3.85 Pass
Opportunities Return on Equity > 15% 26.6% Pass
Valuation Normalized P/E < 20 19.07 Pass
Dividends Current Yield > 2% 0.8% Fail
  5-Year Dividend Growth > 10% 7% Fail
  Total Score   5 out of 10

Source: Capital IQ, a division of Standard and Poor's. Total score = number of passes.

CR Bard scores a mid-range 5. The medical-device maker isn't the most exciting company in the world, but it puts up solid numbers that some investors might like.

Bard focuses on four medical areas: vascular, urology, cancer treatment, and surgical specialty devices. Its stents and catheters help keep blood vessels and the urinary tract open. Because many of its products are disposable, Bard gets a repeating revenue stream as patients need new supplies.

From a financial standpoint, Bard does fairly well in its industry. It has faster growth figures than Boston Scientific (NYSE: BSX) and Baxter International (NYSE: BAX), with far higher net income margin and return on equity as well. It doesn't pay the high dividend that Baxter and Medtronic (NYSE: MDT) do, but with a very low dividend payout ratio of just 13%, Bard would have plenty of room to hike its dividend in the future to compete with Baxter's and Medtronic's higher yields.

Despite its strength within its industry, Bard hasn't seen stellar growth. If the economic recovery, along with favorable demographics, boosts Bard's growth in the future, it may soon look more like a perfect stock. With valuations fairly rich and a low dividend payout right now, you may prefer just to keep Bard on your watchlist for now.

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 CR Bard to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Finding the perfect stock is only one piece of a successful investment strategy. Get the big picture by taking a look at our 13 Steps to Investing Foolishly.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. The Fool owns shares of Medtronic. 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.