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.

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

By Rich Smith

In his most recent letter to Berkshire Hathaway (NYSE:BRKa) (NYSE:BRKb) shareholders, master investor Warren Buffett complained that he's having a hard time finding attractively priced companies to buy. Value investing guru John Mauldin says we're in the middle of a secular bear market and standing on the brink of a recession.

We're in a dangerous market, people. One where many stocks cost too much and give too little. For instance, my worthy opponent in this duel is advocating that you buy a stock that sells for 60 times free cash flow but that has underperformed the Standard & Poor's 500 and lost its owners 79% of their original investment over its history. In a market like this one, investors should prize one thing above all else: security.

In round 1 of this tournament, I explained how tree farmer Plum Creek Timber provides that security. Its trees grow the size of its assets by 5.5% on average every year. The value of the timber those trees yield grows another 4% per annum. Right there you've got a company that, left alone, can nearly duplicate the S&P 500's annual returns flying on autopilot.

But Plum Creek hasn't just mirrored the S&P's returns -- it's crushed them by a nearly 2-to-1 margin. How has it done that? How can it continue to excel? Simple: Plum Creek may be the kind of business that "any idiot can run" -- but its managers are actually pretty sharp.

Plum Creek, you see, doesn't just grow timber. Yes, that's the backbone of the business and the reason this investment provides investors with the kind of security that it does. But through shrewd management of its assets, Plum Creek has significantly boosted returns for shareholders. By refusing to sell timber when the market is flooded -- just letting the trees grow until it's most profitable to sell them. By buying timberland when land is cheap. By selling that land to real estate developers when land is dear.

That, my fellow Fools, is how Plum Creek has prospered in the past. And that's how Plum Creek will continue to reward its shareholders in the future.

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

Wayne , N.J.
52-week low-high: $9.18-$30.65
$285.9 million market cap

By Rex Moore (TMF Orangeblood)

As I coached Audible to its opening-round victory over Akamai (NASDAQ:AKAM), I explained how drastically this company has changed my life. Because it's far and away the Internet's leading provider of digital audio content, with Audible I'm able to download books, newspapers, magazines, and other content onto my MP3 player or burn them onto a CD. As a four-year subscriber, my daily commute has been a joy, as I've been able to "read" more than 100 books I otherwise would never have had time for.

For this round, I've promised to talk more about the business and the stock. Audible makes most of its money from subscriptions to one of its listening plans, which allow for at least a couple of books or newspaper subscriptions per month -- far less expensive than buying a book on tape or CD. This very efficient and lucrative subscription model turns listeners into lifelong partners. Trust me, such recurring revenue streams are a great thing for a business.

Growth has been incredible. With new members now being added at twice the pace of a year ago, earnings are expected to jump by 486% in 2006 and more than double again in 2007. All told, analysts are projecting a five-year annualized growth rate of 40%.

Best of all, CEO Don Katz recently announced plans to sink some money back into the business to finance several new initiatives that I believe will allow Audible to exceed these growth rates. These include the launch of Audible U.K. as a wholly owned unit (one that's expected to turn profitable in 2006), expansion into the educational and training markets ("largest of all markets composed of the purchase of words," according to Katz), and wireless technology that allows the downloading of audio content onto cell phones and PDAs.

Ironically, these initiatives caught analysts by surprise, and most reacted negatively to the news that 2005 profits will be lower than expected so that the company can finance increased growth in 2006 and beyond. This short-term reaction presents us with a gift: We now have the combination of a wonderful company that has just increased its long-term value potential, selling for roughly half the price it did just a few weeks ago. That, my friends, is a performance I hope launches us into the next round of the tournament.

Rex Moore owns shares of Audible.

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