BrandZ measures great companies….. but can it also measure great investments?

Which is the most valuable brand in 2014?  BrandZ report each year provides us the answer to this question.   Sometimes when it comes to investing, we forget that the stock price which goes up and down each day is linked to an actual company.  We forget that these companies operates in the real world, and they sell goods or services to people every day.   There are a bunch of groups which release these types of reports, but what I find interesting, is that the companies where people love their product or service, are sometimes the ones which are preforming financially well. The trick I think to some degree, is linking these types of reports, such as the BrandZ report, to investment ideas.   I am always constantly on the search for new investment ideas and I often find some of them come from the most surprising places. For example, when I go out shopping and I come across a store which packed full of people and a buzz of activity, whilst my family goes off looking around the store, I am frantically looking up the company to see if it is listed and what are the investment fundamentals of the company are on my smart phone. Sometimes it might be brands that I am familiar with, and sometimes it might be companies which are new to the Australian market but have been around for years abroad.  I have found these types of experiences always great places to find new and emerging trends – particularly in the retail space.   If I may be looking for a more mature business, then I might also look at the BrandZ report which I have found a great source of insight in a range of dimensions.  Lets look at an example…. In 2014 Google was listed in the top as the most valuable brand and interestingly the stock is up 31% year to date. Not surprisingly, we have had a love affair with this company for a long time.   Now it is important that you don’t get caught up in fads or fly-by-night companies.  Sometimes I am also interested in changes in these reports.  By looking at the historical reports you can see if a brand as moved up the ladder or down.  These changes can also give great insights too.   Like most things with investing it is important to look at a range of variables and not just one in isolation.  Some companies which rank well on the report, might be too expensive or difficult to value.  If they are in the “too hard basket”, I would just cast them aside and then look for the next.  I find the best ones are often the most simple to understand and simple to forecast.   But keep in mind next time you are out shopping and you see a store packed to the rafters with people and excitement. It might cause you to, instead of grabbing for your plastic credit card (whereby incidentally Mastercard is ranked 18 on the BrandZ report), instead grab your smart phone and punch in the company to see if it is listed and whether this might be the start of an exciting investigation into a potential new company for investment.   Like most great ideas, it is important to get professional advice. So if you want to run past your latest great investment ideas with an experienced company who shares your enthusiasm, feel free to contact our office to chat further about your thoughts, dreams and investment aspirations.