Common Stocks and Uncommon Profits – Point One

Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? 

  • No company grows for a long period of years just because it is lucky.  It must have and continue to keep a high order of business skill, otherwise it will not be able to capitalize on its good fortune and to defend its competitive position from the inroads of others.
  • Sales increases usually come in irregular, uneven spurts rather than in a smooth year-by-year progression.  This is due to the intricacies of commercial research and marketing.
  • Growth should not be measured annually, but by taking units of several years.
  • Fisher divides outstanding growth companies into two categories: fortunate and able and fortunate because they are able.
  • The investor must be alert as to whether the management is and continues to be of the highest order of ability; without this, the sales growth will not continue.
  • Outstanding managers in industries that are subject to technological change navigate the company in a manner that will sustain and improve future sales.  This is necessary for a company to be considered and “outstanding investment”. (p.47 – 51)

 

 

 

 

 

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