Philip Fisher on Earnings Growth

Fisher laid out fifteen points to check before buying a growth stock, centered on whether a company's products had the potential to grow sales for years, whether it was investing in research to keep that potential alive, whether its sales organization was outstanding, whether profit margins were healthy and defensible, and whether management maintained the disciplines needed to keep improving. He emphasized that few companies would pass every test — the goal was excellence on the ones that mattered most for that business.

Fisher's Motorola position, begun in 1955 after researching the company's engineering culture through his scuttlebutt network, was held for the rest of his life and became the canonical proof of his method. The initial decision rested less on the numbers of the moment than on what customers, engineers, and competitors said about the firm's product quality and research pipeline.

Fisher also made an early investment in Texas Instruments when it was still a young semiconductor company, having concluded through industry interviews that its technical talent gave it a long runway of growth. The position, held through enormous swings, illustrated his willingness to pay a seemingly high price for a business whose sales could compound for decades.