It's amazing what a simple metric can tell you about a company.

Especially an unflappably accurate metric. This yardstick cuts to the chase and tells you exactly how well a company performs.

It's in every company's SEC filings.

It's on nearly every financial website.

Most investors skip right over it.

I'm talking about operating margins. It tells you how much a company makes on each dollar it brings in -- before accounting for taxes and interest. The higher the number is, the better.

The only caveat? Consistency. When you look at operating margins, the hallmark of a good stock pick is a consistent or steadily climbing operating margin.

Consider Moody's Investor Service (NYSE: MCO). The company is one of only three players in the credit-ratings business. For years, Moody's had what Warren Buffett refers to as a wide moat -- a sustainable competitive advantage that protects the company's ability to generate profits. But that moat has CME Group (Nasdaq: CME) --  the most profitable company in the S&P with an operating margin of 62%. It also has a near-monopoly in a market that is growing at a scorching pace.

CME Group runs three of the largest futures exchanges in the world: The Chicago Mercantile Exchange -- where the "CME" in its name comes from -- and the New York Mercantile Exchange (the NYMEX) and the Chicago Board of Trade. These marketplaces are where commodities, stock-index futures and major currencies trade.

CME charges a fee for every trade on its exchanges. The more volume these exchanges have, the more fees CME collects. Traders flock to highly liquid exchanges because they offer favorable prices, which gives the company a distinctive advantage. This barrier to entry -- an effective corner on U.S. commodity and currency trading -- is why CME has only one major competitor in the U.S.

Here's another nifty facet of CME's business model: It makes money twice on most of the securities it offers. Many of CME's contracts can't be transferred. That means you can't buy futures on one exchange and sell them on another. There are a million other investors to trade with, but there's only one place to execute the buy and sell orders.

By now you may have heard that the Commodities Futures Trading Commission wants towill continue to rise once a full recovery takes place.

Brad Briggs
Staff Writer
StreetAuthority