Not all R&D Expenses are Created Equal

Some investors consider high research and development (R&D) costs as a positive sign, an indication that the company is investing in its future. Sometimes this is true, but be sure to determine whether the company has high R&D because it wants to or because it needs to, simply in order to keep up with its competition. In the former case, view it as an investment. In the latter case, view it as an operating expense.