Keyword Research

That depends on what the competition is actually ranking for. You should use SEO Spyglass or another backlink checker to look at the anchor texts of the backlinks of all these sites.

An easier thing to check is the onpage SEO of the competition. I.e. is your keyword in the title and description of the competition? If not, it's likely they are not ranking for your term and might be easy to beat.

A screenshot of the MS competition screen would help actually.

if you are new to SEO, than i will suggest dont go for that keyword, it will take months for you build that no of quality backlinks.

You better select the keyword where competitors have less than 100 backlinks.
go for long tail keywords

No, I would say just go ahead and give it all you have got. You can also use Google Keyword Tool in their Adwords section to see which keywords are the best to use. Very easy to use.
My site has very sought after keywords and I have made it to position 12 so far, so it can be done

It depends on several factors, on page and offpage as well as keyword your competitor is targeting. PR alone is not the key factor...but this can't be neglected

Rather than worry about the PR of the site, look at how well optimized it is for the keyword.
How many Red blocks does it have on the right? If you think you can do a better job then go for it.

In order to make your keyword research, you can also use SEMRush. It is a professional tool for keywords analysis that offers lots of information to discover the best long tail keywords for SEO.
In addition, it allows us to see by which keywords we are better ranked, examining the first 20 Google results for the 40 million most popular keywords.

Thanks for the responses everyone! I did the MS research on my home computer and now I am on my work one (which doesn't have MS installed) otherwise I would take a screenshot.

But I will look for anchor text on the competition's sites.

Lets say I have a site with 2000 backlinks (page with 2000 backlinks) assuming a page is coming up, not a www.domain.com (root domain)

Pages are ranked for kws, based on how strong the backlinks are for THOSE kws
not just how many backlinks there are

say its 2000 backlinks
i have a kw of Blue monkeys

How many of the 2000 backlinks have Blue Monkeys in the Anchor text?
Thats really all that matters, THAT is your competition

it could be
Blue monkeys
Blue Monkeys sites
Blue Monkeys 2012

u get the picture
thats how google is pulling up this page. it sees how relevant the term Blue Monkeys is by the strength, of The backlinks with Blue Monkeys in their anchor text

of course onpage SEO plays a factor also
but
if you only see 20 backlinks with Blue monkeys, ok now look at those
whats the PR of those backlinks?
The higher the PR the more difficult to rank for that kw

if all the backlinks are from the same domain? Great
if all the backlinks are PR0 and PR1, you are in luck
shouldnt be hard to outrank

I recently looked up all the pizza sites

Dominos and pizza hut sites are very poorly backlinked
But
Papa johns? Damn
TONS and TONS and TONS of high PR backlinks all over the place, I was amazed,
I would not go up against those guys for terms no way in heck

If you are really concerned about PageRank, then you can install a toolbar like seoquake in your browser, visit each of these URLs (the ones linking to your competitors) and see the PR it says they have.

On the other hand Market Samurai, inside the SEO competition module, shows a value called ACRank, that apparently is a measure of how many backlinks do these backlinking pages have. There may be some degree of correlation to PR, though I haven't done an exhaustive study.

Anyway, regading your original question, what really rank for keywords are pages, not sites, so the BLP (backlinks to page) value is much more important than BLD (backlinks to domain). Also, the on-page factors (the table at the right) is crucial, as TBInternetMarketing said.

So, if you look at your results and your competitor's pages are highly optimized for that keyword (lots of red and yellow at the right) and the BLP value is high, I'd forget about this keyword if you're starting on SEO.

If PR and BLD are high, but on the other side BLP is low and on-page factors are green, I'd give it a try, probably these sites would be ranking for that keyword because of their overall authority, not because they are really targetting or optimizing for it, you can beat them in this scenario.

If it's somewhere in the middle, well, my experience is there's no way to know in advance. Sometimes Google favors new sites with frequent new (good) content and may rank you higher; in other cases, no matter what you do, there's no way to get to page one. So, in this case you'll have to decide whether or not you want to take the chance and maybe succeed, maybe fail.

Thanks Mike, your answer makes sense to me! I will have to go over my search results when I get home and apply what you have just explained.

Keyword research is important for title and meta tag creation.

SEO Spyglass is a beauty for finding the Pagerank of your competitors backlink portfolio.