As you may or may not be aware, I've developed a screen to whittle down potential candidates for Hidden Gem-dom. I'm hoping to provide the Motley Fools Hidden Gems team with some food for thought. So I've been looking at a few stocks that might warrant further consideration, one being Great Wolf Resorts (NASDAQ:WOLF).

The company owns, operates, and develops drive-to family resorts featuring indoor water parks and other entertainment activities for families with children from 2 to 14 years old. Great Wolf owns and manages resorts in Wisconsin Dells, Wis.; Sandusky, Ohio; Traverse City, Mich.; Kansas City, Kan.; and Williamsburg, Va., as well as the Blue Harbor Resort and conference center in Sheboygan, Wis. It's also building two resorts in the Pocono Mountains and one in honeymooner's paradise Niagra Falls.

OK, not the most attractive sites I can think of for a resort, but that's probably the whole point. One goes for the resort benefits, not to sightsee in Sheboygan. If anything, the obscure locations work in the resort's favor. Put your resort in Sandusky and, well, people won't want to leave the resort or spend their money anywhere else.

Competition is fierce. This is the resort biz, after all. Just about any resort or hotel company is Great Wolf's competition, depending on the price points for a resort vacation. Vail Resorts (NYSE:MTN), Starwood Hotels and Resorts (NYSE:HOT), and ILX Resorts (NYSE:ILX) are a few that come to mind.

Priced at $20, the company has a P/E multiple of 86, based on 2005 estimated analyst earnings of $0.23, and a forward P/E of 53, based on 2006 estimated earnings of $0.38. That puts the company at a PEG of 1.32. Right off the bat, it seem expensive. But I want to take a closer look to see whether it hit any other metrics. Great Wolf has hidden value in its real estate and plans to sell condos at some resorts.

Onward to my criteria:

Market cap under $2.5 Billion? Yes, $618 Million.

15% historical & projected earnings growth? Negative for the one year of publicly available data. Analysts predict 65% next year (based on this fiscal year's expectations, and the year that follows), 15% over five years.

Free cash flow positive? No. FCF is negative, but for good reason -- expansion!

MC/FCF less than P/E? N/A

MC/FCF/5-year growth rate under 0.66? No

Debt 20% of equity and reasonable? OK. 41% of equity, and used for expansion.

Net profit margins greater than 7%? No way. Very negative numbers.

Insider ownership of 20-50%? Yes, a nice 24%.

Why would a respected mutual fund manager like Ron Baron buy into it, given some of these metrics? I think he sees a lot of real potential for the company's strategy and assets. It may not be a Hidden Gems candidate by my standards, but remember, rules are never hard and fast. I like the company's strategy, and think it will be interesting to watch as it grows further. It may not meet my rules, but that doesn't mean it won't fit your own.

For further Foolishness:

It may not be right for Motley Fool Hidden Gems , but Great Wolf is aMotley Fool Rule Breakerspick. What's the difference? Find out here.

Fool contributor Lawrence Meyers owns no stocks in this article, but is searching for one to buy. Don't listen to him, though -- do your own research.