With investing, it can be tough to find the right stock, but every sector has outliers that stick out ahead of the competition.
Feb. 8, 2020
There are more than 3,000 companies publicly listed in the U.S. There is only a small portion of these which can be classified as ‘megabrands’, which are instantly recognizable no matter where you are in the world.
These are 3 brands that have ascended to such status in their respective sectors of Tech, Apparel and Clothing, and Auto Manufacturing.
Not even the market havoc caused by the coronavirus in late-January was enough to keep Apple (NASDAQ: AAPL) down for long, with the company soaring to new highs following a blockbuster Q1 earnings report last month.
With its market cap hovering around the $1.4 trillion mark as of February 5, the world’s most valuable brand only looks set to keep rising. Despite a decline in growth through 2019, iPhone sales appear to be back up, with growth of 8% in the holiday season.
However, Apple’s success seems to be branching out into other sectors, with its Wearables segment surging 37% over the past year, while a renewed focus on services saw this portion of business rise 17% in the first fiscal quarter. Services now account for 14% of all sales coming out of Cupertino. The Apple Watch and AirPods range account for 38% and 55% of their respective markets alone.
With more than 85% growth in the past year, and 158% growth over the past 5 years, Apple is certainly a stock worth holding onto.
Nike (NYSE: NKE) is a company that I would consider ‘the Apple of apparel’, but many Nike fans might think of Apple in reverse. There is no denying the brand power of the swoosh, which has blown analysts away over the past two quarters, leading to a more than 23% growth in stock over the past year.
Despite constant competition from the likes of Under Armour (NYSE: UAA) and more recently Lululemon (NASDAQ: LULU), Nike does not look ready to fall from its throne just yet, with its sneaker segment boasting an incredible 27% global market share in 2019.
Nike has no need for heavy marketing spend anymore as such a massive brand, which is evidenced in its decline in recent years from nearly $1.5 billion in 2016 to $1.4 billion in 2018. Therefore profit margins are getting wider, which accounted for the gross profit increase of 11% over the last two quarters. The company is constantly innovating, and its move to invest heavily in online retail has helped it avoid the dreaded ‘retail apocalypse’.
There are no guarantees in this world, but if Nike continues to execute what it’s already doing over the next few years, and it continues to outperform the analysts, it could just keep running (no pun intended).
I can already hear the bearish investors disagreeing with me on this one, but I believed this before it hit a $100 trillion valuation, and I believe it now: Tesla (NASDAQ: TSLA) is a megabrand.
At the time of writing, Tesla stock is just shy of 100% growth over the past month. It reported great earnings in January and set ambitious guidance as usual. Analysts are even predicting Tesla stock to hit $7000 by 2024. Six months ago this notion would be laughable, but now? Not so much.
Tesla is now the largest car manufacturer in U.S. history, worth a lot more than both Ford (NYSE: F) and General Motors (NYSE: GM) combined. Its new China plant has been a smashing success and will soon produce 3,000 cars a week, while a fourth Gigafactory will begin construction in Germany this year. These moves look to be taking care of Tesla’s infamous production problems.
So why are people still bearish? Because Tesla has a history of being erratic, missing targets, it has yet to have a profitable year, and CEO Elon Musk is a bit of an acquired taste. However, after betting that the company would fail, many bears seem to be cutting their losses — and that is actually pushing shares higher. At this point, Tesla is the biggest name in electric vehicles, and one of the biggest brands in the world.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Apple, Nike, and Tesla. Read our full disclosure policy here.