The following article is part of The Motley Fool's "Stock Madness 2005," a contest based loosely on the annual NCAA College Basketball Tournament, a.k.a. March Madness. From March 17 to April 4, our writers and analysts will engage in head-to-head competition with each other, advocating and arguing on behalf of 64 stocks we've selected as among the most interesting to Foolish investors. You, dear readers, are the fans and referees -- you'll read these exciting duels and then vote for the stock you think is the better investment.and should therefore move on to the next round of play. The company that survives six "games" will be our tournament champion, and its writer our most valuable "coach."

But, please, make no mistake -- "Stock Madness 2005" is a GAME!

Our writers are doing this for fun. They are enjoying the spirit of competition and the art of debate. They are delighting in the search for positives in the companies they've drawn.and negatives in the companies they're pitted against. They are NOT necessarily recommending these stocks as the ones they believe in above all others. As ever, YOU must decide whether the stocks we're writing about -- winners and losers -- are deserving of your investment dollars.

Protein Design Labs (NASDAQ:PDLI)
Fremont, Calif.
$15.80
52-week low-high: $13.79-$27.58
$1.6 billion market cap

By Charly Travers (TMF BreakerCharly)

Biotech companies are unlike any other type of company in the public markets. Massive losses every year are expected while investments in drug research and development are made in the hopes that one day something will come from all that upfront research. This can go on for years and years.

Even though I'm a biotech investor, I don't find that at all appealing or even acceptable. Stringing along investors with tales of clinical successes to keep pulling money out of their pockets isn't really a business model. It's more like sitting at a bar telling stories so that people will keep buying you drinks.

Fortunately, not all biotechs are destined for eternal red ink on the income statement. This is what I am looking for: companies with a clear timeline to profitability and the means to get there. From studying the values of biotech companies that have been through this process, I also know that the best time to invest is before this transition has taken place -- in companies on the verge of metamorphosing from an R&D entity to a profitable commercial operation.

With Protein Design Labs, all of these pieces are in place. Because of the company's strong intellectual property estate, it receives a substantial and growing royalty revenue stream from top-tier biotechs such as Genentech (NYSE:DNA) and MedImmune (NASDAQ:MEDI). On top of that, the company recently acquired a profitable drug company called ESP Pharma, so it now has its own products to sell.

This gives the company a diverse revenue stream that is expected to run the top line up to $250 million this year and deliver positive cash flow next year. I am certainly happy with that. What this strong financial performance does is allow us to sit and wait while the company's pipeline matures. As I discussed in Round 2, I believe there is a blockbuster in the making with Nuvion for treating severe ulcerative colitis. Having other sources of revenue to sustain the company while Nuvion progresses through clinical trials makes me very comfortable with Protein Design Labs.

Fool contributor Charly Travers is the biotech analyst for Motley Fool Rule Breakers . He owns shares of Protein Design Labs.

Plum Creek Timber (NYSE:PCL)
Seattle , Wash.
$35.61
52-week low-high: $27.30-$39.45
$6.6 billion market cap

By Rich Smith

Master value investor Peter Lynch said it best: "Buy what you know."

Show of hands, people. How many of you know "Herceptin?" Anyone? OK, how about "Nuvion?" Hmm. Not encouraging.

These are, after all, the two biggest arguments in favor of our opponent in today's contest. The first one -- the one that sounds like a nasty social disease -- is currently one of Protein Design Labs' revenue producers. The other one, which sounds like some alien tribe from a Star Trek episode, is the one that PDLI stakes its future upon.

If you don't know what these things are, if you need to take somebody else's word for it on what they mean to the company you're sinking your money into, that should make you nervous.

But never fear, because I happen to have here another stock idea, and it's one you can get your head around. Trees. You've heard of those. Big brown things with green on top. Plum Creek Timber grows 'em, and I guarantee you, if you invest in Plum Creek, you'll know exactly what you're buying.

Because Plum Creek grows trees. Cuts them down, saws them up, and sells the wood for a hefty profit. That's a business you can understand, and more important, it's a business you can track without needing an "expert" to tell you what's what. Go into Home Depot (NYSE:HD) and see that treated pine costs a buck more than it did last week: You know that lumber prices are on the rise and that a tree farmer like Plum Creek is going to benefit.

It always has. While timber real estate investment trusts have historically trounced the Standard & Poor's 500 return by a margin of 13% to 10.5%, Plum Creek is arguably the best company in its class -- nearly doubling the S&P's return since its creation. With superb management and a built-in 9.5% average annual increase in the value of its assets, how could it not?

For to quote another investing master, Warren Buffett: "In the short run, the stock market is a voting machine; but in the long run, it's a weighing machine." Protein Design Labs may be a popular choice among biotech risk-takers today, but over the long term, Plum Creek will better reward you with real profits -- and what's more, you'll understand how you earned them.

Fool contributor Rich Smith has no position, short or long, in any company mentioned above.

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