Barron's R&D Stock Picks
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Created by barrons3
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Date updated:09-27-2008

Research-and-development spending as a guide for buying stocks.

symbol name last price % change open
  • +
  • TLAB
    Tellabs
  • $5.77
  • -1.37%
  • $5.85

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.

People owning TLAB also tend to own: BABMYCDLCSCODREFNSRGPS

TheStreet.com Rating: D What is this?

  • +
  • MOT
    Motorola
  • $6.41
  • 0.00%
  • $6.35

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.

People owning MOT also tend to own: CCLXCVSGOOGGSHDJNJ

TheStreet.com Rating: D+ What is this?

  • +
  • 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.

People owning SUNW also tend to own: AAPLAMDCSCODELLGOOGIBMINTC

TheStreet.com Rating: No Rating What is this?

  • +
  • ISRG
    Intuitive Surgica
  • $159.05
  • +6.54%
  • $152.73

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.

People owning ISRG also tend to own: ABBASEINVSPGAAPLBAMBBD

TheStreet.com Rating: B- What is this?

  • +
  • AKAM
    Akamai Technologi
  • $22.19
  • +2.31%
  • $21.54

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.

People owning AKAM also tend to own: CMGFCXGOOGJECRIGTJXAPA

TheStreet.com Rating: C What is this?

  • +
  • GOOG
    Google Inc.
  • $428.40
  • +0.43%
  • $426.74

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.

People owning GOOG also tend to own: AAPLAMDCSCODELLIBMINTCMSFT

TheStreet.com Rating: B- What is this?

  • +
  • AAPL
    Apple Inc.
  • $139.49
  • +0.10%
  • $138.99

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.

People owning AAPL also tend to own: AMDCSCODELLGOOGIBMINTCMSFT

TheStreet.com Rating: B- What is this?

  • +
  • PFE
    Pfizer Inc
  • $14.98
  • 0.00%
  • $14.98

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.

People owning PFE also tend to own: AAALLAPCBUDCOPCVXDOW

TheStreet.com Rating: C What is this?

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