Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want? One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock and then decide whether Paychex, Inc. (NASDAQ:PAYX) fits the bill. The quest for perfection Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

• Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
• Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
• Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
• Moneymaking opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
• Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
• Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Paychex.

Factor	What We Want to See	Actual	Pass or Fail?
Growth	5-year annual revenue growth > 15%	2.7%	Fail
	1-year revenue growth > 12%	4.9%	Fail
Margins	Gross margin > 35%	69.9%	Pass
	Net margin > 15%	24.7%	Pass
Balance sheet	Debt to equity < 50%	0%	Pass
	Current ratio > 1.3	1.10	Fail
Opportunities	Return on equity > 15%	34.4%	Pass
Valuation	Normalized P/E < 20	22.01	Fail
Dividends	Current yield > 2%	4%	Pass
	5-year dividend growth > 10%	4.8%	Fail
	Total score		5 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Paychex last year, the company has dropped a point, as dividend growth has slowed down. The stock has posted only middling performance, rising between 5% and 10% over the past year.