Philip Arthur Fisher was an investment legend. His ideas, books, and actions have directly influenced generations of successful investors. His most successful book, Common Stocks and Uncommon Profits (1958), is considered one of the most important works in the field. In this post, we will see the 15 points Philip Fisher used to evaluate a stock.

According to the author, these issues are important for an investor who wants to obtain a type of investment that, in a few years, could yield a gain of more than 100% or, in a longer period, could provide him with a proportionally greater return.

Despite the importance of all the points, the author himself says that a company does not need to meet all the points below, but to be a worthwhile investment, it should meet most of them.

Fisher’s 15-point checklist to select quality stocks

Check 1

Do its products or services have enough market potential for sales to grow a lot for at least several years?

Check 2

Is management committed to developing new products or processes that keep sales growing after the current products have matured?

Check 3

How effective is its research and development, compared with the size of the company?

Check 4

Is its sales organization better than average?

Check 5

Are its profit margins worthwhile?

Check 6

What is it doing to maintain or improve those margins?

Check 7

Are its relations with employees outstanding?

Check 8

Are its relations with its executives outstanding?

Check 9

Does it have depth in management, beyond a few people at the top?

Check 10

How good are its cost analysis and accounting controls?

Check 11

Are there aspects specific to its industry that show how it compares with its competitors?

Check 12

Does it take a short-term or a long-term view of profits?

Check 13

Will its future growth require issuing so many new shares that existing shareholders lose most of the benefit?

Check 14

Does management talk openly with investors when things are going well, but go quiet when problems appear?

Check 15

Is management’s integrity beyond question?

You can learn more by reading the book Common Stocks and Uncommon Profits. For another take on what makes a great company, see Peter Lynch’s 13 attributes of the perfect company.

Happy investing!

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