A Rule Maker, in the Foolish sense of that phrase, meets all or most of the following criteria:

  • Has a strong, well-known brand that becomes increasingly relevant in our lives.
  • Makes mass-market products or services.
  • Makes products that are easily accessible and convenient to consumers.
  • Has very high margins and sales growth.
  • Has strong balance sheet and low debt.
  • Has expanding possibilities.

Have you ever thought of Google (NASDAQ:GOOG) as a follower? The little search engine burst onto the 'Net in 1997 with the novel idea that relevant search results were better than unrelated nonsense. Over then next three years, it pushed aside competitors like WebCrawler, AltaVista, and Lycos to become the premier search solution in the Western world -- and then kept growing.

These days, Google has entered the dictionary by dint of its huge presence in our lives, much like Xerox (NYSE:XRX) and Kleenex. You might talk about "Googling" the burning questions in your life rather than "searching" for the answers. We all use Google every day, and even when we don't, we're bound to see a plethora of Google AdSense marketing messages on the sites we keep bookmarked. Check off the first two Rule Maker criteria, right now!

No, make that three. Google didn't become the online behemoth it is today by putting out subpar products. Modern competitors include industry veteran Yahoo! (NASDAQ:YHOO), software titan Microsoft (NASDAQ:MSFT), and innovative upstart IAC/InterActiveCorp's (NASDAQ:IACI) Ask.com, a formidable group with lots of brainpower, market presence, and old-fashioned business know-how. But according to all the third-party search market reports, Google is pulling away from that pack, month by month.

Next up, we're looking for great margins and exploding sales. Google's net income in 2004 was 12.5% of its $3.2 billion of revenues. Yahoo! matches that profit margin today, with $6.4 billion in sales. But Google has moved on to revenues of $10.6 billion, and 29% net margins. That's better than Microsoft, better than Oracle (NASDAQ:ORCL), and way ahead of most any software or online service company you'd care to mention. Check.

You want a strong balance sheet? Google has no long-term debt and $11.2 billion of cash equivalents, thanks in no small part to $5.1 billion of retained earnings. It's one of those situations where you wonder how they're planning to use that stash o' cash -- not how they're going to raise it. So, another check.

That leaves us with a plea for expanding possibilities. Where should I begin?

Google is in a unique position. Other than perhaps Microsoft and Cisco Systems (NASDAQ:CSCO), no other company in the world has as many business partners and as deep and rich an information flow as the Mountain View boys do. And Microsoft has as many enemies as friends, while Cisco's information is mostly business-related.

With a finger on the pulse of the world, and arguably the finest engineering staff ever assembled, Google has a clearer view of where the world is going than you, me, or pretty much anybody, as well as the resources to capitalize on upcoming changes. The company is already moving offline, into our cell phones and living rooms, and there's no telling where they might go next.

But one thing is abundantly clear: Google doesn't follow the rules. It makes them. And then it makes money. You'll see this story play out over the next couple of years, and then you'll look back at 2007 with a new appreciation for how cheap the stock was at less than $500 per share.

Now go back and read about the other contenders for the best Rule Maker. For more stock ideas, visit Motley Fool Inside Value, where we identify industry leaders trading for bargain prices. Try Inside Value free for 30 days.

Microsoft is a Motley Fool Inside Value pick, and Yahoo! a Motley Fool Stock Advisor selection. If we had a Rule Makers portfolio these days, Anders is certain that Google would be in it -- but we don't. Check out the newsletter services we do offer with a bushel of free 30-day trial passes.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, but mostly only because Foolish trading rules prevent him from taking positions in the companies he loves to mention almost every day. You can check out Anders' holdings if you like. Foolish disclosure makes the rules around here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.