Common Stocks and Uncommon Profits – Point Two

Does the management have a determination to continue to develop products or services that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?

  • R&D is most effective for investors when it is connected to the current product line. (p.53)
  • The caveat being a company with multiple¬†divisions that are unrelated, but within each division there should be some continuity.
  • Investors do best when the company’s research is focused on industries related to the existing business
  • A company should have the mindset that they will eventually exhaust the potential of their existing product line; thus they should always be focused on tomorrow’s market.
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