GREAT BRANDS OF TOMORROW

Credit Suisse released a superb piece of research earlier this year on the great brands of tomorrow.  CS found that a strong brand is a vastly underappreciated investment thesis.   Most interesting, however, is that the strategy approach pays.  According to their research the “brand company” index has outperformed the S&P 500 by 64 points since 1997:

“An underappreciated investment thesis. There are few true competitive advantages in modern industry: scale, proprietary technology, monopolies, and network externalities come to mind. We believe brand is an equally powerful and even more sustainable advantage, but one often ignored by financial markets owing to its intangible nature. Our research indicates that companies focused on brand building consistently generate outsized long-term growth, profitability, and returns. An equal-weighted stock index of companies that spend at least 2 percent of sales on marketing outperformed the S&P 500 by more than 400 basis points annually since 1997; the top quintile of these companies outperformed the market by an amazing 17 percent per year.”

This is an interesting study for several reasons, not the least of which is the global strength it pinpoints.  This is a truly globally diversified portfolio.  So what are the companies they currently consider “strong brands”?  The list of 27 follows:

1. Alibaba

2. Amazon (AMZN)

3. Almarai

4. Apple (AAPL)

5. BIM

6. Capitec

7. China Merchants Bank

8. Comac

9. Enfamil (MJN)

10. Facebook

11. Hyundai

12. Indian Hotels

13. Julius Baer

14. Li Ning

15. Mahindra & Mahindra

16. MercadoLibre (MELI)

17. Mercedes-Benz

18. Polo Ralph Lauren (RL)

19. Sonova Holding

20. Swatch

21. Tiffany & Co. (TIF)

22. Tingyi

23. Trader Joes

24. Tsingtao Brewery

25. Under Armor (UA)

26. Uniqlo

27. Yakult Honsha

Source: Credit Suisse