Now I want to take a closer look at Chico's and try to determine whether I can make five times my money in the next decade with this company. For the record, if you invested $10,000 in Chico's five years ago, it would be worth $235,000 today.

As shown below, we see consistent gains in accrual profits -- net income as defined by generally accepted accounting principles -- matched by generally higher levels of defensive and enterprising profits. (Please read my earlier column on Enron to learn more about these two alternate income statements.)

Solid Profits Different measures move in tandem

Sources: Company reports, EarningsPower.com

Let's focus exclusively on the relationship between defensive and enterprise profits. As this column has noted before, the best companies to own, especially for the long term, are those that are situated in the upper-right box, or Earnings Power Box, and that keep moving in an upper-right direction.

Chico's is in the Earnings Power Box and is also moving in an upper-right direction, signaling the possible beginning of a staircase. Thus, Chico's earnings quality is impressive.

The Right Box Chico's is where it needs to be

Sources: Company reports, EarningsPower.com

When deciding whether a company has the right stuff to go up five times in the next decade, I find it useful to compare certain benchmarks against other companies that performed well.

Here, then, are Chico's sales, sales growth, defensive profits growth, enterprising profits growth, return on enterprising capital (ROEC) and "return on greenest dollar" for the four quarters ended August 2002, as well as same periods from prior years. (The return on greenest dollar is the percentage return a firm earns on its most recent four quarters' worth of its investment in capital. The higher the number, the better.)