Common Stocks and Uncommon Profits

You have some money in your bank. You decided to invest some money in the common stocks. You have reached on blogthis decision as you want to have more income than if you would these funds in other way .History might be irrelevant to most of you but we compare the returns by looking at the past. It’s more fun and interesting to find some excellent companies in the market. Valuations may matter but that’s secondary to identifying the top-notch business. Here are some questions by Philip A. Fisher that will help in identifying the common stock with uncommon profits 🙂

  1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
  2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
  3. How effective are the company’s research and development efforts in relation to its size?
  4. Does the company have an above-average sales organization?
  5. Does the company have a worthwhile profit margin?
  6. What is the company doing to maintain or improve profit margins?
  7. Does the company have outstanding labor and personnel relations?
  8. Does the company have outstanding executive relations?
  9. Does the company have depth to its management?
  10. How good are the company’s cost analysis and accounting controls?
  11. Are the other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
  12. Does the company have a short-range or long-range outlook in regard to profits?
  13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholders’ benefit from this anticipated growth?
  14. Does the management talk freely to investors about its affairs when things are going well but “clam up” when troubles and disappointments occur?
  15. Does the company have a management of unquestionable integrity?

2 thoughts on “Common Stocks and Uncommon Profits

    1. Hi SIddhesh,

      I won’t say that I know the answer to your question, but if I would try, I would say that the answers to these questions are not easily measured, but rather by reading and reading all the news and information you can from the company and then decide how you would answer to these questions.
      I think the more you spend time on researching companies and their stocks the better you’ll invest. Everyone emphasizes how doing your homework is the most important. Also try not to speculate, but find true value in my honest opinion.

      Like

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