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 Vail Resorts (NYSE: MTN) 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 Vail Resorts.

Factor

What We Want to See

Actual

Pass or Fail?

Growth 5-year annual revenue growth > 15% 6.2% Fail
  1-year revenue growth > 12% 35.9% Pass
Margins Gross margin > 35% 19.1% Fail
  Net margin > 15% 3.8% Fail
Balance sheet Debt to equity < 50% 60.7% Fail
  Current ratio > 1.3 0.80 Fail
Opportunities Return on equity > 15% 5.6% Fail
Valuation Normalized P/E < 20 38.79 Fail
Dividends Current yield > 2% 0% Fail
  5-year dividend growth > 10% 0% Fail
       
  Total Score   1 out of 10

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

Vail Resorts comes up short with just a single point. But the poor showing belies the company's amazing share performance in recent months, with the company's premier ski resorts putting in strong numbers over the past season.

Two years ago, Vail looked like exactly the wrong play at the wrong time. In the midst of recession, its luxury vacation offerings and exposure to a bad real estate market looked like major drags on any future performance. Indeed, you can still see the remnants of those burdens in the company's long-term revenue growth and balance sheet figures.

But even though not everyone has benefited from a strong economic recovery, luxury-based companies have performed pretty strongly. We've seen that from high-end retailers, and the same is true for the highest-end ski resort company. Even while Six Flags Entertainment (NYSE: SIX) had to file bankruptcy to restructure itself, Vail has seen substantial growth in the past year. Compared to park and resort peers Cedar Fair (NYSE: FUN) and Great Wolf Resorts (Nasdaq: WOLF), Vail's financials actually look reasonably good -- and the growth recovery story is alive and well.

Along with its improvements, Vail has seen shares soar, almost doubling over the past two years. That makes the stock look as pricey as some of the company's lift tickets. Despite its unique assets, the company doesn't pay a dividend and hasn't seen margins return to their pre-recession levels. Until that happens, Vail won't be a perfect stock in my book.

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 Vail Resorts 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. 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.