Because this R&D-at-a-reasonable-price idea delivered returns amid the Crisis of '08, we screened stocks last week for deeply discounted R&D investments. The result is a contrarian list from which you'd need a strong stomach to buy the high-ranking names: Tellabs (TLAB), Motorola (MOT) and Sun Microsystems (SUNW) have foundered, despite heaps of R&D spending. Their stocks are down by as much as 50% this year.

Because this R&D-at-a-reasonable-price idea delivered returns amid the Crisis of '08, we screened stocks last week for deeply discounted R&D investments. The result is a contrarian list from which you'd need a strong stomach to buy the high-ranking names: Tellabs (TLAB), Motorola (MOT) and Sun Microsystems (SUNW) have foundered, despite heaps of R&D spending. Their stocks are down by as much as 50% this year.

Because this R&D-at-a-reasonable-price idea delivered returns amid the Crisis of '08, we screened stocks last week for deeply discounted R&D investments. The result is a contrarian list from which you'd need a strong stomach to buy the high-ranking names: Tellabs (TLAB), Motorola (MOT) and Sun Microsystems (SUNW) have foundered, despite heaps of R&D spending. Their stocks are down by as much as 50% this year.

Companies more expensively valued relative to their R&D, like surgery-robot maker Intuitive Surgical (ISRG) or the operator of Internet-acceleration servers Akamai Technologies (AKAM) offer less scientific bang for the buck.

Companies more expensively valued relative to their R&D, like surgery-robot maker Intuitive Surgical (ISRG) or the operator of Internet-acceleration servers Akamai Technologies (AKAM) offer less scientific bang for the buck.

Being value-minded, like most quants, Mezrich's measure of research value ranks a company higher if it has a history of high R&D spending but is also an unloved stock. Specifically, he adds up a company's last five years of research spending, then divides by the company's current enterprise value. Google and Apple rank low by this standard. They spend a lot on research, but their stocks are expensive.

Being value-minded, like most quants, Mezrich's measure of research value ranks a company higher if it has a history of high R&D spending but is also an unloved stock. Specifically, he adds up a company's last five years of research spending, then divides by the company's current enterprise value. Google and Apple rank low by this standard. They spend a lot on research, but their stocks are expensive.

Pfizer (PFE) and Schering-Plough (SGP) continue to invest in R&D, but have battered shares, so they outrank Wyeth (WYE). Regeneron Pharmaceutical (REGN) rates higher than more richly valued biotechs like Amgen (AMGN) or Vertex Pharmaceuticals (VRTX). The idea here is inspired by the value-investing tradition: Buy a dollar of research for fifty cents.