Investors who consistently profit in the stock market may have different styles, but they all have one trait in common. They don't just buy stocks; they invest in solid companies.

In the past few years, lots of novice investors -- and more experienced individuals who should have known better -- decided that they really didn't have to know much about the companies whose stocks they were buying. If a stock was moving up rapidly, it was good enough for them.

This approach became known as "momentum" investing -- and it didn't take long before it was discredited, as the fledgling Internet and technology companies that had sparked the momentum concept crashed back to earth in a matter of months.

Now that sales, profits, products and good management are back in vogue, here are three ways to tell if a company is a solid prospect for your portfolio:

�         The balance sheet. What's the company's financial health? The balance sheet will tell you. A company's balance sheet is quite simple to obtain. It's easily accessible by looking up the company's profile on the Yahoo Finance Internet site. It's also fairly easy to understand. It lets you know what assets and liabilities the company has, and how much short-term and long-term debt it owes.
A company with a "clean" balance sheet has a good ratio of assets to liabilities, little or no debt, and substantial cash. Proven companies with cash and no debt can be held through good times and bad because they earn interest on the money they have instead of making interest payments on the money they owe. They have the financial strength to weather any storm.

�         Revenue growth. Sometimes you'll come across a company that has a clean balance sheet but not much in the way of sales. These are almost always young, unproven companies in fields such as biotech and high technology. These companies have raised cash from investors through a public stock offering, but have yet to come up with a winning product or service. Their stocks are high- risk because such companies can burn up their cash before ever turning a profit.
An investor looking for real growth wants to see a steady pattern of revenue gains over a period of years. Companies that consistently increase their sales are connecting with the marketplace.
Large sales gains accompanied by small profits are not a good sign, but are often explainable. A company could be pouring money into expansion and new product development, or a company may need to be operated more efficiently. Companies with big sales and small profits shouldn't be an investor's first choice, but shouldn't be dismissed either. When a company finds a way to bring more of those sales dollars to the bottom line, the stock can become a big winner.

�         Growing profits. For an investor, the best of all worlds is finding a company with a clean balance sheet, steadily increasing sales and a record of double-digit annual earnings growth. When you find a company like this, your key decision is whether the company's stock is reasonably priced.
In 1980, you could buy shares of rapidly growing blue-chip companies at 15 to 20 times the most recent year's earnings. In other words, if the company had earned a $2.00 a share for the past year, you could probably purchase the stock somewhere near $35.
Today, high-tech, high-growth companies like Cisco Systems can sell for 100 times earnings. But do a little digging using the Yahoo Finance or CNBC.com Web sites and the stock tables of the Wall Street Journal, and you can identify sound, growing companies selling at reasonable earnings multiples.

If you can find the combination of a clean balance sheet, steadily growing sales and ever-increasing profits in companies with reasonable earnings multiples, you won't go far wrong in your stock purchase selections.

Ophthalmology Management Associate Editor Jerry Helzner has written more than 50 articles on stock investing for Barron's. He has been a regular stock market columnist for other business publications and was a member of the equity research department of a major regional brokerage firm.