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 Coeur d'Alene Mines (NYSE: CDE) 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 Coeur d'Alene Mines.

Factor

What We Want to See

Actual

Pass or Fail?

Growth 5-Year Annual Revenue Growth > 15% 30% Pass
  1-Year Revenue Growth > 12% 81.5% Pass
Margins Gross Margin > 35% 51.4% Pass
  Net Margin > 15% (10.5%) Fail
Balance Sheet Debt to Equity < 50% 10% Pass
  Current Ratio > 1.3 1.33 Pass
Opportunities Return on Equity > 15% (2.9%) Fail
Valuation Normalized P/E < 20 NM NM
Dividends Current Yield > 2% 0% Fail
  5-Year Dividend Growth > 10% 0% Fail
       
  Total Score   5 out of 9

Source: Capital IQ, a division of Standard and Poor's. NM = not meaningful due to negative earnings. Total score = number of passes.

Coeur d'Alene hits the middle of our 10-point scale. The miner has been in the middle of a hot trend, but it hasn't done as good of a job of capitalizing on it as it could have.

Three years ago, things at Coeur d'Alene looked ugly. The silver producer found itself nearly destroyed in 2008 by the combination of a correction in precious metals and the financial crisis, having to execute a 1-for-10 reverse split to get its shares out of penny-stock territory. And even as late as August 2010, the company was posting significant losses despite the huge bull move in silver prices. Meanwhile, competitors in the space such as Hecla Mining (NYSE: HL) and streaming company Silver Wheaton (NYSE: SLW) were faring better than Coeur d'Alene was.

This year, though, things started looking up for Coeur d'Alene. While Hecla faced some environmental questions, Coeur d'Alene's sales ramped up 75%, with cash flow almost tripling in the fourth quarter.

Still, though, Coeur d'Alene's financials don't look as attractive as its competitors. Both Silvercorp Metals (NYSE: SVM) and Pan American Silver (Nasdaq: PAAS) sport far better margins -- not to mention being profitable -- while Coeur d'Alene still sports negative earnings over the past 12 months. And now with silver prices having fallen sharply, some fear the end of the bull market may be at hand.

Even if you think silver will rebound from here, Coeur d'Alene doesn't look like the right way to profit from it. In such a positive environment, you can't afford to go with anything short of perfection in the silver space.

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.

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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.