With Valentine's Day coming up, it's Cupid's time of year once again. So, prepare yourself for a deluge of sweet and sappy all week long.

Lucky you, whether you're floating high on new (or renewed) love or you've lost that loving feeling, we've got a special feature that will at least satisfy your passion for stocks. Our annual Stocks Fools Love series offers up five companies that have our writers simply gaga.

Of course, you'll have to be your own love judge when it comes to buying these stocks. Do your homework -- don't get caught with love goggles on. And if you love digging into companies for stock ideas, we unwrap our best picks each month in our investment newsletters.

In today's Motley Fool Take:

Toyota Rules the Road

By Rich Smith

Toyota Motor (NYSE: TM) blew past the competition in its most recent quarter (fiscal Q3 for 2003), overtaking Ford(NYSE: F) to assume the No. 2 position among the world's auto makers -- and causing General Motors(NYSE: GM) to cast nervous glances at its rearview mirror. Toyota's net income rose 60%, despite operating income increasing a relatively modest 11% and sales 8%.

These results are particularly striking in light of the yen's rise against the dollar. The dollar-to-yen exchange rate is currently at a three-year low, and Toyota makes nearly one-third of its new car sales in the U.S. That means, for every sale of a Corolla, Camry or Tacoma in the U.S., dollar profits earned translate into fewer and fewer yen falling to Toyota's bottom line.

Toyota attributed its strong performance to cost cutting and increased sales. How did it achieve both?

For one, Toyota sparingly uses "incentives" -- rebates, 0% financing, and similar flavors of the financial heroin that U.S. car makers have become addicted to in recent years. Those kinds of measures may boost sales, but every dollar given back to a consumer is a dollar of profit lost to the seller.

Toyota has no need to offer generous incentives to attract customers. The quality of its cars does that. You see, I disagree here with Third Avenue Funds' Chief Investment Officer, Martin Whitman, who, in his interview with Tom Gardner in the June issue of Motley Fool Hidden Gems, argued that "on a worldwide basis Toyota Motor is going to turn out to be the Wal-Mart(NYSE: WMT) of the automobile industry."

Rather, I think Toyota is fast becoming the Tiffany & Co.(NYSE: TIF) of the auto industry: the place you go to shop when your primary interest is getting good quality, regardless of the price.

Remember, Toyota is now advertising its entry-level Scion cars as being "under $20,000." Once again, that was under $20,000 for an entry-level car. Not exactly cheap. But also, not exactly bad news for Toyota's profitability. If Toyota can command prices like those for its most basic offerings, I suspect it will not have to settle for the No. 2 slot in the world car biz for much longer.

Rich Smith does not own stock in any of the companies mentioned above, nor is he a certified "car guy."

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Mattel Gets Smart

By Selena Maranjian (TMF Selena)

Educational toys have become big business lately, reportedly accounting for about 15% of the nearly $19 billion toy market. In fact, while the overall toy business has been sluggish, educational toys have been gaining in popularity.

Not skipping a beat, the Fisher-Price division of America's largest toy maker, Mattel(NYSE: MAT), is introducing its largest educational toy line ever.

Neil Friedman, president of Fisher-Price, told Reuters that, "Learning is one of our major corporate initiatives, it has been for a number of years. ... It is the fastest growing piece of the preschool business."

Fisher-Price products include Hokey-Pokey Elmo, Rescue Heroes, and Little People, along with the more enlightening Kasey the Kinderbot interactive robot, Learn Through Music, and the PowerTouch electronic reading and math skill developer. The newest educational fare is designed to compete with the likes of LeapPad, laptop-like systems that feature interactive workbooks, put out by the folks at LeapFrog Enterprises(NYSE: LF).

Kasey the Kinderbot is being joined by Toby the Totbot, who teaches letters, numbers, and shapes, and Fetch the Phonicsbot, which focuses on letters, phonics, and spelling.

InteracTV is another interesting innovation, permitting preschoolers to interact with a variety of favored TV shows on DVD, such as Blue's Clues, Dora the Explorer, or Sponge Bob Square Pants. Check out these and other new toys at vendors such as Wal-Mart(NYSE: WMT), Toys "R" Us(NYSE: TOY), Target(NYSE: TGT), and Amazon.com(Nasdaq: AMZN).

Respected Oakmark Select mutual fund manager Bill Nygren recently made some favorable comments about Mattel, noting that its core brands (such as Barbie, Hot Wheels, and Fisher-Price) generate an unusually high percentage of the company's sales, in the neighborhood of 70% or 80%, and that these recur year after year. This means the company isn't as pressed to come up with new sources of sales each year.

For the list of companies Selena owns, click here.

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Play It Safe the Ben Graham Way

By Chris Mallon

There is no guarantee of success in the stock market, but smart investors are always trying to improve their chances. The father of value investing, Benjamin Graham, laid out 10 timeless criteria that, if met by a company, get you as close to that elusive guarantee as possible.

One of these rules is to pay no more than two-thirds of the net current asset value (NCAV) for a company. Net current asset value is the difference between current assets and total liabilities, effectively measuring the amount of liquid assets a shareholder can lay claim to. It's a powerful tool for estimating the margin of safety, and we all know how important that is.

The logic behind Graham's rule is twofold, involving safety and value. In the event of bankruptcy, current assets will be converted to cash at close to their carrying value, so by paying less than two-thirds of net current asset value, you're likely to get most of your initial investment back after paying off all the liabilities. (This logic applies only if you actually buy a company, not its stock; stockholders rarely recover anything in the event of bankruptcy.)

Theoretically, you break even before you sell the long-term assets, which may not fetch anywhere near the carrying value on the balance sheet. Plus, from a value perspective, paying less than NCAV is like buying only the liquid assets in the company, while getting the fixed ones for free.

Of course, we're talking about ideal situations here, and in today's overvalued (in my opinion) stock market, it's nearly impossible to find a company trading at a discount to its net current asset value. You can, however, find companies with at least positive NCAV, including some big names like Microsoft(Nasdaq: MSFT), Intel(Nasdaq: INTC), and Nike(NYSE: NKE). Consumer products companyNational Presto Industries(NYSE: NPK) has a very liquid balance sheet, and trades at just under a 25% premium to its net current asset value.

Graham's NCAV rule represents the essence of conservative value investing. It guarantees nothing, but it does put the odds of success in your favor. And when you're dealing with a creature as fickle as Mr. Market, that's about the best you can expect.

Chris Mallon does not own any of the companies in this article, but he is hiding under the desk waiting for your emails.

Quote of Note

"Love does not begin and end the way we seem to think it does. Love is a battle, love is a war; love is a growing up." -- James Baldwin

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