This article is part of our "Best Stocks for 2011" series where our Foolish writers pick their top stock ideas for the year ahead. Click here to see a review of last year's picks and our 12 recommendations for the year ahead.

When looking for a great stock, I have three simple criteria: I want a story I can believe in, a business I think will be around for the long haul, and a price that doesn't make me cringe.

For 2011, the company that fits the bill is IMAX (Nasdaq: IMAX). IMAX has proven over the past year to be a lasting business and is expanding its core business while investing in opportunities for the future.

The IMAX experience
I really started noticing IMAX's differentiation when Avatar was released just more than a year ago. The cinematic masterpiece took 3-D to another level and gave movie buffs a reason to demand a premium experience. But I fully expected the hype to die down as less extravagant movies started to hit theaters.

But IMAX has proven to be more than just a one-hit wonder, and the icing on the cake was the opening of Tron: Legacy, in which IMAX took 24% of the opening weekend domestic box office. My proxy for IMAX demand has been its percentage of domestic opening weekend box office. Below are a few of the more notable movies in 2010 that show that IMAX is still in demand.


Domestic IMAX Theaters

Percent of Opening Weekend Box Office

Avatar 178 13.0%
Alice In Wonderland 188 10.5%
Inception 197 11.5%
Tron: Legacy 234 24.0%

Not every film is right for IMAX, but IMAX can hand-pick the movies it releases and schedule them to be released every few weeks throughout the year. This assures IMAX of capturing the most valuable weekends of each blockbuster movie.

But the real beauty of IMAX's business model is the ability to take a piece of the box office from both studios and theaters. The company digitally remasters each movie for IMAX and in turn takes a cut of every ticket sold from the studio. Then, in joint venture theaters -- where IMAX is focusing on expansion -- the company takes another cut from the theater for the use of IMAX's equipment. So, every new theater is like a new money tree just waiting to be picked.

Everyone is excited about IMAX
In 2010, theaters have been excited about IMAX, signing up for 201 new outlets. After closing 2009 with 288 IMAX theaters, the company anticipates ending 2011 with 444-461 theaters. And in case you were wondering if IMAX was pulling the wool over new customers' eyes, 85% of this year's signings are with operators like Regal Entertainment (NYSE: RGC) that already have IMAX theaters.

And IMAX is just starting to scratch the surface of international expansion. The company has just more than 100 commercial IMAX theaters and estimates that a potential 800 theaters could be built.

Studios are excited about IMAX as well, with Disney and Dreamworks among the regulars in IMAX theaters. Warner Brothers Pictures, a unit of Time Warner (NYSE: TWX), even signed on for up to 20 releases in IMAX through 2013.

I know what you're thinking. ReadD (NYSE: RLD) has more theaters and more box office revenue, so why shouldn't I invest there? Not all theaters are created equal, and despite having 9,300 theaters last quarter, RealD's film revenue was $3.7 million less than IMAX's film revenue from 470 theaters. Overall, IMAX screens have had 4.6 times the box office of other screens.

Beyond the theater
With IMAX theaters clicking on all cylinders, the company needs to expand beyond the theater to augment growth. This year, management proved that IMAX has seen the future -- and it starts in the living room. IMAX signed on with Sony (NYSE: SNE) and Discovery Communications (Nasdaq: DISCK) to make a 3-D television network that will launch early in 2011. The channel will feature original series, content from Sony, as well as IMAX features like Into The Deep 3-D and Magnificent Desolation: Walking on the Moon 3-D.

IMAX also made a strategic investment in Laser Light Engines this year alongside Harris & Harris (Nasdaq: TINY), and it plans to make similar investments in 2011. The Laser Light investment will help IMAX create a light source that is brighter, enhancing 3-D pictures even further.

If you build it, they will come
Additional screens and the success of Avatar have helped IMAX's revenue jump 48.1% over the past year, and 2011 will see additional revenue from 75-85 more screens.

IMAX is reasonably priced with a forward multiple of 23.2 and has beaten estimates two of the past three quarters. Analysts are even starting to come around on the IMAX story by raising estimates for the current quarter and 2011. I'm a big fan of companies that can beat expectations and keep analysts scrambling to raise estimates further.

With studios, theaters, and customers buying into the IMAX experience, I think this stock is the best pick for 2011. Has this Fool fallen off his rocker? Let us know in the poll below.

Which is the best stock for 2011? See all 12 candidates here.