Buy stock who have strong advertising, marketing and sale operations

A company might have a great product or service, but all those pretty features are of no use if they cannot sell it, which means that sales and marketing re the lifeblood of every organization.

A sign of a company with strong sales and marketing is increasing revenues. While profits can be messaged, revenues are quite basic and cannot be fudged without doing something grossly illegal. If you see healthy growth in revenues year after and if these revenues are keeping up with net income increase, this a good sign. Another positive indicator is low turnover within the upper management of the sale and marketing departments.

Since net income can be massaged to make it look better than it is, it is a good idea to look at free cash flow and compare that to increases in revenues. If revenue increases are not resulting in higher free cash flows, whither the company is reinvesting vast amount of cash into capital expenses or they are employing some creative accounting with regards to recognizing revenues.