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Alger on the Money - Reaping the Rewards of Innovation

05 May 2017

The most innovative companies grow their sales—and their stock prices—faster.

  • Academic studies1 and Alger’s research suggest that the most innovative companies, as indicated by R&D as a percentage of sales, often outperform. For example, the most innovative companies of the S&P 1500 a decade ago produced earnings per share growth that was several hundred basis points higher than the least innovative companies over the subsequent 10 years.
  • In addition, the most innovative companies in the S&P 1500 outperformed the least innovative companies over the past decade by a significant margin (see chart).
  • Companies that identify and act on opportunities for change through innovation will not only survive, they will flourish. As their stock prices grow, the benefits will accrue to investors.


Read Capital Markets: Observations and Insights—Earnings Resurgence

> Download Alger On the Money, A view on the U.S. Market



1 Baruch Lev and Suresh Radhakrishnan, “The Stock Market Valuation of R&D Leaders".

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