Date updated:09-27-2008
Research-and-development spending as a guide for buying stocks.

-
TLAB
Tellabs - $5.72
- -0.69%
- $5.65
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.

-
MOT
Motorola Inc - $8.28
- -2.36%
- $8.40
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.

-
SUNW
Sunw - $0.00
- N/A
- $N/A
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.

-
ISRG
Intuitive Surgica - $276.44
- -0.80%
- $277.25
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.

-
AKAM
Akamai Technologi - $23.94
- -1.28%
- $24.07
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.

-
GOOG
Google Inc. - $569.964
- -0.53%
- $569.99
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.

-
GOOG
Google Inc. - $569.964
- -0.53%
- $569.99
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.

-
AAPL
Apple Inc. - $199.92
- -0.29%
- $198.33
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.
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