If research and development spending yields future sales and profit gains – and according to a recent Jack Hough column in Barron’s, there is considerable data to suggest it does – then tomorrow’s growth companies may be today’s big spenders.
Finding companies that are accelerating their R&D spending is easy with the YChart Stock Screener. Choose a universe of stocks to screen, say the S&P 500, by clicking on the “All Companies” button beneath “Start With.” Click on “Indexes” and then, to the right, on S&P 500.
Now, click on “Add a Financial Metric,” and under “Category,” click on Income Statement. Just to the right, under “Metric,” you can click on “R&D Expense,” and then a third column will appear and you can choose a time period of growth, say, “Growth: 10 Year.” Click. Now you’ve got your list and you can click on the column header, “R&D Expense 10 Year Growth” and the list we be ranked by how rapidly R&D spending has grown at these 500 companies.
Google (GOOG) tops the list with an incredible annualized increase over the past 10 years. Other big R&D spenders include Amazon (AMZN), eBay (EBAY) and Apple (AAPL).
The screener allows you to add other metrics, say PE ratio, dividend yield and dollar amount of trailing twelve months actual R&D outlays. Using these and more, you can start to zero in on companies that fit your overall investment profile but that also have the potential bonus of future growth due to heavy R&D spending.
Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.
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