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1 Metric You Must Know for Tech Investing

By Kevin Chen - Apr 23, 2013 at 6:30PM

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Find out how research and development spending may drive a company's profitability.

While Wall Street myopically focuses on a few numbers, like revenue, earnings, and price-to-earnings, you would be better off following another metric. Since companies -- especially tech ones -- thrive on the profits they earn from innovate products and services, you would be better off understanding how research and development spending relates to a company's profitability.

In the video below, Fool contributor Kevin Chen reveals the one metric every investor should know. He also walks you through how you can use this metric to inform your buy or sell thesis for IBM (IBM 1.79%)Baidu (BIDU 1.16%)Apple (AAPL 3.10%)Google (GOOGL 3.90%), and Nokia (NOK 0.89%).

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$148.24 (3.10%) $4.46
Nokia Corporation Stock Quote
Nokia Corporation
NOK
$5.14 (0.89%) $0.05
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$139.34 (1.79%) $2.45
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,240.03 (3.90%) $84.17
Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$137.78 (1.16%) $1.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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