Stole this from another site
I've been re-reading Philip Fisher's investment classic Common Stocks and Uncommon Profits to see how his 15 criteria for picking great growth stocks relate to SLA.
(For those who haven't heard of him, Fisher was an American fund manager from the 1930s to the 1970s with a remarkable track record for picking great growth stocks and widely considered to be the father of the growth style of investing in much the same way Benjamin Graham and Warren Buffett are considered to be the fathers of the value style of investing.)
I'll run through Fisher's 15 points for picking great growth stocks one by one with my own comments on how I think SLA stacks up. I'd also really appreciate some comments and feedback from others who have been following the company for far longer than me and have researched it in far greater depth to see how they think SLA rates.
One final clarification before I begin, in Fisher's words " A company could well be an investment bonaza if it failed fully to qualify on a very few of them (ie a few of the 15 points). I do not think it could come up to my definition of a worthwhile investment if it failed to qualify on many."
1) Do the products have enough market potential to increase sales for the next few years?
I think we'd all agree a resounding yes !!!
2) Does management have the drive to continue increasing total sales through innovation?
Again a resounding yes! one only has to look at the R&D pipeline.
3) How effective is the conpany's R&D relative to its size?
Phenomenal !!!
4) Is the sales and marketing organization above-average?
Probably to early to tell, but the early signs are encouraging.
5) Does the company have good profit margins?
Although we don't know the exact profit margins at this stage, they should be very high.
6) How is the company improving profit margins?
SibEx acquisition and new methods for Ropren delivery are 2 significant examples.
7) Does the company treat workers well?
I'm not in a position to make an informed comment here. From my limited dealings with them, they appear to have a happy and motivated staff. Can Charles or anyone who has had more dealings with the company than me give some feedback?
8) Does the company treat executives well?
I think Fisher was referring to larger organisations than SLA here with many layers of management. Probably too early to tell here.
9) Does the company have a deep management bench?
A subjective call here, but IMHO Denis and Vagif with the help of Peter, Charles, Gene and Victor Roschin make a great management team. Too early to comment on the new appointments.
10) Does the company control cost and accounting well?
Exceptionally well!!!
11) Does the company stand out amongst competitors in any way (particular to industry)?
Does it what! Try treatments for previously incurable conditions and diseases without side effects !!!
12) Is the company long-range forward-looking?
Excellent strategic management looking forward a long way!
13) Is the company going to dilute shareholders excessively?
Refer to point 10. An exceptionally frugal management who have their interests aligned with shareholders.
14) Does the company speak freely of the good as well as the bad?
I'd appreciate some comments here from those who go back with the company longer than me. As far as I can tell in my dealings with them, and going on the open and frank way in which Denis and Vagif spoke and answered questions at the AGM, I'd say not a problem.
15) Does the management have unquestionable integrity? ( Fisher regarded this point as the most essential)
Again a subjective call, But IMHO an unequivocal yes!!!
So... to sum up, I think SLA passes Fisher's criteria for a potentially great growth stock with flying colours.
And that was posted 6 months ago....WOW