Wise investment advice, my dumbest investment and taking stock of Intel.
Philip Fisher is one of the world’s best investment thinkers.
Here are six of his famous “Fifteen Points to Look For in a Common Stock” from his classic book, “Common Stocks, Uncommon Profits” (Wiley, $22). They can help you identify well-managed companies with excellent prospects.
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• “Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?”
• “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?”
Great companies keep innovating.
• “Does the company have a worthwhile profit margin?”
Some companies make big bucks despite small margins — via great sales volume. But in general, the bigger the profit margins, the better. And ideally, they should be growing.
• “Does the company have outstanding labor and personnel relations?”
It’s a plus for a company to have happy employees.
• “Does the company have outstanding executive relations?”
Among other things, executive compensation should be within industry norms.
• “Does the company have a short-range or long-range outlook in regard to profits?”
It’s the long run that matters most. Look for big goals and smart strategies.
My dumbest investment
Dear Fool: I invested money in an option-recommending service and actually almost broke even.
I became suspicious its recommendations were being “sold” too aggressively after a couple of small wins, so I stopped. I heard from a government fraud department that the company’s execs were being charged with just that: fraud.
The Fool responds: When receiving financial advice, watch out for anything that smells fishy, such as big promises and guaranteed returns.
Our friends at the Securities and Exchange Commission (SEC) offer tips about newsletters and fraud here: sec.gov/investor/pubs/cyberfraud/newsletter.htm.
They note that some advisers are paid to promote various investments and that they’re required to disclose such arrangements.
Some may break the law and not disclose, but others may offer vague or hard-to-find disclosures. Other advisers may be quietly invested in what they recommend.
You can check with the SEC to see if a newsletter has gotten in trouble. The SEC warns: “Don’t invest in small, thinly traded companies unless you’re prepared to lose every penny.”
The Motley Fool take
Intel inside … your portfolio?
If you want to invest in the future of technology, you need to consider the world’s largest semiconductor manufacturer, Intel (Nasdaq: INTC).
Its market share in microprocessors, desktop processors, mobile processors and server processors tops 75 percent in each category.
It doesn’t have much of a presence in smartphone and tablet processors, but it’s addressing that shortly, though some fear it may be arriving too late to the party.
There’s a lot to like about Intel.
While many technology companies pay no dividend, needing to plow any excess cash into fueling growth, Intel was recently sporting a 3.1 percent dividend yield, and it has been hiking its dividend by more than 25 percent annually, on average, over the past 15 years.
It can afford to, with roughly $15 billion in cash and short-term investments on its balance sheet.
It’s investing heavily in its future, as well, beefing up its research and development (R&D) spending significantly in recent years.
It has announced, for example, that it’s dedicating $100 million toward accelerating the development of technology in the auto industry.
And along with IBM and others, Intel is investing $4.4 billion over five years to create a semiconductor R&D hub in New York to develop next-generation chip technology.