philip fisher common stocks and uncommon profits

However eventually what happens is that over time the business generates more surplus capital and cash flow that it can reasonably attempt to reinvest in this business it may have tapped out many of its growth markets it may have reached a steady-state where ongoing capital expenditure hymens minimal and it just has a lot of surplus cash flow this business may then choose to do one of two things.

Given the growth opportunities available to the business, the company chooses to reinvest profits that are generated back into the business to go after untapped growth in its markets to the extent of the businesses can generally able to reinvest these findings at high returns on invested capital it makes sense of this business to continue doing this rather than paying out money back to shareholders. It's doing all of this in a way that generates strong returns on equity for its investors. This business is one that's growing its revenue strongly, it's producing great cash flows and great profitability. Let's say you have identified a high-quality growth stock early on in its growth phase. The way I think about this is as follows. One of the ideas he introduces in his book is the concept of a deferred dividend. It will pay anyone handsomely to take a look at this book irrespective of what your investment style is.Īs an investor that has both dividend and growth investments, I found Fishers advice informative and practical. Fisher had great in investment success and a really strong track record.

That meant that he typically went after very early stage businesses that were typically less than 20 billion in market capitalization. However the interesting thing about Phil Fisher is that he was primarily interested in growth stocks, and investing in stocks for their growth potential. Phillip Fisher is an investment legend to whom Warren Buffett attributes a lot of his success in fact I've read comments from Buffet where he suggests that he's 80% Phil Fisher and 20% Ben Graham. I'll aim to flesh some of these concepts out in the upcoming weeks, but one concept that I want to bring to your attention is the concept of a deferred dividend and why it maybe something that's powerful for younger investors to consider.įirst bit of background for all of you. This book is chock full of intriguing investment concepts that would take me a number of posts to fully articulate and present. I want to introduce that to all of you here.įor those of you who haven't had the opportunity to read Common stocks for Uncommon Profits by Philip Fisher, I would highly recommend it to you. I was recently reading an investment book that got me thinking about the concept of deferred dividends.

Philip fisher common stocks and uncommon profits