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.

7-Eleven (NYSE:SE)
Dallas , Texas
Price: $24.33
52-week low-high: $13.65-$25.70
$2.8 billion market cap

As 7-Eleven's coach, I must say I was a bit surprised at our relatively low seeding. After all, my company carries greater name recognition than almost anyone else in this tournament -- and as we all know, a great customer brand is an extremely valuable asset.

As a 7-Eleven stockholder who's enjoyed a 70% return in the year I've owned it, I know the enchanting power of the big green, red, and orange sign. Think about it; if you're craving a snack and a drink and have the choice of pulling into a 7-Eleven or a generic tiny-mart store, what are you going to do? The choice is easy for me. I'm going for a fresh Turkey and Cappicola Club Wrap and a Big Gulp Pepsi with a shot of cherry flavoring.

If it's been a while since you've visited, you should know this is not your father's 7-Eleven. Yes, the Slurpee is still alive and well (and bringing customers into the stores), but much has changed in a dozen years. CEO Jim Keyes has transformed the stores into bright and inviting oases. Each location offers a surprising variety of fresh food designed by a team of full-time chefs. (I'm not making that up.) There are fountain drinks with flavor shots, "Dreammm Doughnuts" that rival everything except fresh KrispyKreme (NYSE:KKD) doughnuts in flavor, and an almost unlimited number of coffee combinations.

A great brand and top-notch management helps explain why I think this company will continue to grow strongly over the long term. Best of all, its valuation looks very enticing at this point, and I think the share price can double over the next five years. And that's something I'll offer more details on if you vote us into the next round!

Rex Moore owns shares of 7-Eleven.

Lloyd's (NYSE:LYG)
London , U.K.
Price: $37.06
52-week low-high: $29.40-$39.51
$51.5 billion market cap

I have to admit that I wasn't too keen on Philip Durell's choice of Lloyd's when he selected it for Motley Fool Inside Value back in November. I lived in London for six years (which explains the use of the word 'keen' in the first sentence) and was unimpressed by the banking giant. But Philip knows a thing or two about banking stocks, and Lloyd's has turned out to be an outstanding pick. The stock is up 16.4% since November and also provides a 7% dividend yield.

But the story is even better than that. Lloyd's has strengthened its focus under a new CEO, Eric Daniels, and is now reaping the benefits. New business is up 26% at Scottish Widows, the company's life and pensions unit, and growth is expected to continue in that area. Net profit from continuing operations was up a steady 12% in the most recent reporting period. Management's success thus far in turning this company around has led to Lloyd's being mentioned as a potential takeover target. That'll teach me to doubt Philip's wisdom.

Lloyd's is also an ideal addition to anyone's portfolio. It's what you might call a three-fer: It offers exposure to the financial sector, pays a substantial dividend, and provides exposure to the pound. So those investors considering U.S. banking stocks such as Citigroup (NYSE:C) and Bank of America (NYSE:BAC) might want to give Lloyd's a close look.

Remember when David Robinson, a.k.a. "the Admiral," led an undermanned Navy squad all the way to the elite eight in 1986? This year, I'm hoping the Fool's TMF Admiral, Philip Durell, will be able to carry Lloyd's deep into our tournament. Because if you're looking for a low-risk stock that provides income and capital gains and even offers the possibility of considerable upside, then Lloyd's is an excellent pick.

John Reeves does not own any of the companies mentioned in this article.

I can offer up one enticing valuation nugget: 7-Eleven's estimated 20% annual growth rate over the next five years looks outstanding next to its price-to-free cash flow multiple of 14. Lloyd's, on the other hand, has struggled mightily over the past three years, losing about 15% of its value during a time when 7-Eleven gained 120%. I wouldn't have much confidence in trying to predict Lloyd's growth rate, putting any valuation on shaky ground. I think it's prudent to stick with the steady performer here. -- R.M.

I think I'll let these figures make the case for Lloyd's:

Dividend yield:
Lloyd's: 7%

7-Eleven: 0%

Risk (based on beta figures):
Lloyd's: Moderate

7-Eleven: High

Revenue Growth (last fiscal year):
Lloyd's: 6.6%

7-Eleven: 6.5%

-- J.R.

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