R&D: the key to long-term sales and profit growth

Companies that spend heavily on research and development (R&D) greatly improve their long-term odds. Dr Mike Tubbs explains what to look out for – and what to buy now.

933_MW_P30_Analysis

Volkswagen spent €13bn on research and development last year

Companies that spend heavily on research and development (R&D) greatly improve their long-term odds. Dr Mike Tubbs explains what to look out for and what to buy now.

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Top-ten companies by R&D in 2017/2018
Samsung€13.4bn
Alphabet€13.4bn
Amazon€13.1bn
Volkswagen€13.1bn
Microsoft€12.3bn
Huawei€11.3bn
Intel€10.9bn
Apple€9.7bn
Roche€8.9bn
Johnson & Johnson€8.8bn
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CompanySectorR&D intensity 2017/18Sales growth 2017/18
AlphabetSoftware14.5%22.8%
AmazonRetail/Software12.7%30.8%
BroadcomTech. hardware18.7%33.2%
FacebookSoftware19.1%47.1%
HuaweiTech. hardware14.7%15.7%
Lam ResearchTech. hardware10.7%38.2%
Salesforce.comSoftware14.9%24.9%
TeslaAutomotive11.7%68.0%
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Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.