Last week’s question and answer

I was founded in Indianapolis in 1876 by a Civil War veteran who was dismayed by snake oil salesmen hawking “medicines” in sideshows. The 38-year-old chemist began developing high-quality medicines to be dispensed by doctors. I introduced the world’s first insulin product in 1922, and in the 1940s I developed a method to mass-produce penicillin, the first antibiotic. In the 1980s I introduced the world’s most widely prescribed antidepressant, Prozac. I employ more than 46,000 people and spend 19 percent of my revenues on researching and developing new drugs. Who am I?

(Answer: Eli Lilly)

Grocery gripes

I have some Winn-Dixie stock from my mom that has done nothing but sink in value during the past five years. Do you think it will go up? — A.S., Hendersonville, N.C.

What we think shouldn’t matter as much as what you think. Whenever you own stock in a company, you should have a good grip on how it makes its money, what its growth prospects are, how financially healthy it is (in terms of cash, debt, etc.), and how well it can compete, among other things.

No one can know exactly how the firm will ultimately fare, but the grocery business is a tough one these days. Supermarkets, which have long had thin profit margins, are now competing with the likes of Wal-Mart, which doesn’t like to lose.

If financial advisers, including the Fool, really knew the market, wouldn’t they make all their money by investments instead of relying on selling investment newsletters? — Bob Corson, Ottawa, Ohio

This is an excellent point and is especially true of those who hawk get-rich-quick schemes. If they could really increase their wealth by 20 percent per month, they’d be insanely wealthy in short order and wouldn’t have to sell books, seminars and newsletters.

The Motley Fool was founded by two brothers who already had been investing successfully for years.

Our company has long advised that the best way to get rich is to patiently invest over a long period, pointing out that the stock market’s historic average annual return is around 10 percent. Our many books are inexpensive, and our vast Web site, www.fool.com, is largely free. Our newsletters (www.fool.com/shop/newsletters) are designed to help investors do much better than average, but we don’t promise any quick riches.

Sun Microsystems

Quarter after quarter, Sun Microsystems (Nasdaq: SUNW) is confounding investors. Recently, four Wall Street analysts rated the stock as a “Buy,” seven gave it a “Sell” rating, and 13 called it a “Hold.”

For investors seeking growth, Sun just doesn’t stack up. Its revenues dropped in its last reported quarter and aren’t expected to surge anytime soon. The company’s “x86” hardware sales represent just 1 percent of its total revenue, so even explosive growth there won’t have much impact on growth. Let’s say Sun’s Linux-friendly Solaris 10 system can grab 50 percent of the market controlled by Red Hat, the leading U.S. provider of Linux’s operating system. At best, that would add only another 1 percent or 2 percent to earnings.

Even so, the stock might have some shine for value investors. Sun’s draconian cost-cutting is paying off — its bottom line is now out of the red. The stock sells near a price-to-sales multiple of just over 1. Then there’s the firm’s $7.4 billion cash pile. That alone is worth about $2.20 per share, or more than half of the company’s total capitalization.

Value investors, who are normally in for the long haul, may soon find some merit in Sun as a short-term play. Growth investors, who typically have shorter investment horizons, may want to look elsewhere. There are many other technology companies with better growth prospects.