5 Big-Brand Winners?

Published in Investing on 25 September 2012

Apple and YouTube are voted the world's two coolest brands; do big-brand shares outperform?

Each year, British brand consultancy CoolBrands produces a list of the UK's coolest brands. This year, the results were decided following responses from 3,000 consumers and a panel of 39 experts.

Here are this year's top 20 coolest brands:

3Aston Martin
6BBC iPlayer
8Virgin Atlantic
9Bang & Olufsen
11Sony (NYSE: SNE.US)
15Ben & Jerry's
19Nike (NYSE: NKE.US)

The UK's top 10 brands

In six of the past seven CoolBrands surveys, luxury carmaker Aston Martin has taken the top slot. This time, the UK's coolest brand is technology titan Apple (second in last year's survey), which launched its iPhone 5 smartphone over here last week.

Video website YouTube took second place, relegating Aston Martin to third. Fourth was social network Twitter, followed by YouTube owner Google in fifth. BBC iPlayer was only the second British brand in the top six, followed by music festival Glastonbury and airline Virgin Atlantic. Rounding off the top 10 are Danish audio-visual specialist Bang & Olufsen and London department store Liberty.

Flagging brands

Looking back at last year's CoolBrands survey, I found no fewer than 14 names that have completely dropped out of this year's list. Here are these departed brands:

Last year's rankBrandMarket
4RolexLuxury watches
8FerrariLuxury cars
11Alexander McQueenFashion (clothing)
12Dom PerignonChampagne
13PlayStationGames consoles
14Ray-BanFashion (sunglasses)
15ChanelFashion (perfume and clothing)
16NintendoGames consoles
17Vivienne WestwoodFashion (clothing)
18Agent ProvocateurFashion (lingerie)
19Tate ModernLondon museum
20MaseratiLuxury cars

What seems particularly surprising is that Harley-Davidson, Rolex and BlackBerry can fall out of this year's survey, having finished third, fourth and sixth respectively in last year's list. Clearly, we Brits are very fickle when it comes to choosing our favourite brands, especially when it comes to fashion designers, gadgets and luxury cars.

With so many of last year's must-have brands out of fashion this year, does this means that companies with high-profile consumer brands make for bad investments? Alternatively, does having a powerful brand boost both sales and share prices?

Five brilliant brands

Let's find out by reviewing the share-price performances of five leading brands:

1. Apple

Today, Apple is the hottest technology stock on the planet. Five years ago, Apple stock traded at around $144. This week, it briefly touched $705 and, as I write, trades at $689. At this price, Apple's market capitalisation is an incredible $645 billion, making it the world's most valuable company.

Clearly, with its shares rising by 378% in the past half-decade, the designer of iPod, iPhones and Macs has been a massive winner for its owners. Also, Apple has begun paying a dividend, with $2.65-a-share in cash paid out on 16 August.

2. Google

Google is in the enviable position of owning two brands in this year's top five: video site YouTube in second and popular search engine Google in fifth. Five years ago, Google shares changed hands at $560, before plunging towards $250 in the financial crisis of late 2008. As I write, they trade at $759, up 36% in five years.

I still kick myself for not buying Google below $300 in the aftermath of the bankruptcy of US investment bank Lehman Brothers. Nevertheless, with the S&P 500 index down 1.5% since September 2007, Google has easily beaten the wider US market.

3. Sony

We've had two big-brand winners, so now it's the turn of a loser. For at least three decades, Sony has been one of the world's biggest brands in consumer electronics. However, its shares have taken a beating of late and, in Japan, trade close to 20-year lows. Its US-listed shares currently trade at $12.34, down a brutal 74% -- nearly three-quarters -- in the past five years.

What's more, while Apple and Google go from strength to strength, Sony still has a host of problems to overcome. Blaming poor sales of LCD televisions and a strong Yen, Sony (which lost $5.8 billion in 2011-12) issued a profit warning last month, cutting its forecast net profit by a third to Y20 billion. For now, it seems Sony is one brand under siege.

4. Ben & Jerry's

Founding by a pair of 'hippy' friends in 1978, ice-cream maker Ben & Jerry's was sold to Anglo-Dutch conglomerate Unilever (LSE: ULVR) in April 2000. Over the past five years, Unilever shares have shot up from 1,618p to today's 2,289p, rising more than two-fifths (41%). With the blue-chip FTSE 100 (UKX) index down more than 9% since September 2007, Unilever is clearly another big-brand winner. Right now, its shares pay a dividend of around 3.4% a year, which is broadly in line with its blue-chip peers.

5. Nike

The last of our five big brands is Nike, a $43 billion corporation owning what has to be the world's biggest sportswear brand.

Once again, Nike shareholders have been rewarded for sticking with an all-powerful brand. Over the past five years, its shares have leapt from $57.26 to $95.38 as I write, a rise of two-thirds (66%). With the S&P 500 index down 1.5% over the same period, Nike is another winning brand for shareholders.

Big brands boost shares

Although I've looked only at the five-year capital gains for just five company shares, I suspect that a wider survey would also demonstrate that top brands go hand in hand with top-performing shares. Hence, my advice for investors looking to beat the market would be to invest in companies that own powerful, well-known and well-managed brand names.

Finally, star fund manager Neil Woodford knows the value of investing in only the best businesses and brands. Woodford looks after £20 billion for British investors and his market-beating performance is second to none. To find out which great businesses Woodford owns, read Eight Shares Britain's Super-Investor Owns.

For more about these eight money-making machines -- and Woodford's marvellous mind and methods -- download your free copy of our report today.

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> Cliff does not own any of the shares mentioned in this article. The Motley Fool owns shares in Google.

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The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

Erling2000 26 Sep 2012 , 12:59pm

I thought Amazon is outperforming Google. I like and use Amazon and disappointed to see it was not on the top 10 list.

Clitheroekid 26 Sep 2012 , 8:17pm

Interesting that Facebook isn't mentioned at all. One would have thought it registered higher than this in the consciousness of those people who use the word `cool' without irony.

Perhaps its demise is to be even faster than I'd hoped for. Or more realistically it's just become a dull everyday utility that's lost its novelty value and is now about as exciting and `cool' as the gas supply.

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