3 Stocks That Inspire Brand Loyalty Like Apple
How often do you see a corporation's logo proudly emblazoned on a bumper sticker? Or a worldwide outpouring of emotion over a CEO's death? Or people lined up by the hundreds, practically begging a company to relieve them of their hard-earned cash for the latest and greatest product?
Not very often. I'm talking, of course, about Apple (NAS: AAPL) . Companies that inspire this kind of fierce dedication are apt to perform well for investors in both good times and bad. Following are three corporations that inspire loyalty in the Apple tradition, along with a look at how each is currently doing.
1. Amazon.com (NAS: AMZN)
From the little online company with the funny name that just sold books and music, Amazon has grown into an online-retailing giant that now sells just about everything, at prices that are hard to beat and with customer service that's second to none.
And now, with the lineup of highly regarded Kindle e-readers successfully up and running -- along with all the e-book, digital music, and streaming-movie content you could want -- Amazon is creating a product ecosystem that will take customer loyalty to previously unseen levels. By the numbers:
- Quarterly revenue grew a gigantic 34.6% year over year. Compare this with Barnes & Noble (NYS: BKS) , which grew its revenue at only 4.9% YOY. Thinking beyond books and music is the smartest thing Amazon ever did, and is something B&N probably regrets not doing.
- Amazon's quarterly earnings fell 57.7% YOY, this due to the company selling said Kindles at, very likely, a loss. But the Kindles are a way to lock customers into what is only a growing market for digital content, so the company is taking a loss now with the hopes of profit later. It's a reasonable bet.
- The company has a little more than $9.5 billion in cash and only $1.8 billion in debt. Way to go, Amazon.
The stock is trading for around $180 per share. At 131, the P/E is unusually high. Investors in the Amazon brand, like its customers, tend to be zealously bullish. But they have good reason to be. No other company is doing what Amazon is. It's blazing a trail. As such, you're getting a lot of company for the multiple.
2. Toyota (NYS: TM)
Despite some recent fuss with automobile recalls, Toyota owners are still a loyal lot -- driving their Camrys, Corollas, and 4Runners into the ground and then coming back to get new ones. And with the runaway success of the Prius lineup, the company has given a whole new generation of Toyota customers -- the eco generation -- a brand to attach their green souls to. By the numbers:
- Quarterly revenue grew a healthy 4.1% YOY.
- Quarterly earnings were down by 13.5% YOY. This was due to the general disruption caused by Japan's earthquake and tsunami, the flooding in Thailand (which affected the company's supply chain), and the appreciation of the yen against other currencies.
- The company has $36.4 billion in cash and $145.3 billion in debt. While this is hardly ideal, at least money is cheap right now, and with Japan now returning to normal after the quake, so should Toyota's normally healthy profits.
The stock is trading for about $83 with a P/E of 111. Just like with Amazon, Toyota investors, like Toyota drivers, are a zealously loyal bunch. And again like with Amazon, you're getting a lot of company for the multiple -- a company that's bound to bounce back to pure greatness.
3. Starbucks (NAS: SBUX)
Around the world, Starbucks has become a "necessity" for people. Whether it's a stop on the way to work for their daily triple-shot mocha cappuccino, or the morning ritual of grinding their favorite beans for steeping in their coffee press, Starbucks has become something of a planetwide addiction.
In founding Starbucks, CEO Howard Schultz set out to create a "third place" -- a new location between work and home where people could linger, meet up with friends, or sit and read a book -- and he did so with a vengeance. By the numbers:
- Quarterly revenue grew a big 16.4% YOY. Peer Dunkin' Brands, at 12.4% revenue growth, is also doing very well, but not quite like the green mermaid. For all the power of the Dunkin' brand, which has been around a lot longer than Starbucks, it's never quite reached the cult status Starbucks has.
- Starbucks' quarterly earnings were up a robust 10.2% YOY.
- Cash on hand is a hardy $2.27 billion, with debt a very manageable $549.5 million.
The stock is trading for around $48 per share, with a P/E of 29. Once again, this P/E is on the high side, but that's sometimes what you get with companies people are crazy about. But after hitting a rough patch several years ago, and the consequent return of Howard Schultz that turned the situation around, Starbucks is on the move in only one direction now: up.
Standing on the shoulders of Apple
Amazon, Toyota, and Starbucks. Three companies that, each in their own way, inspire brand loyalty in the tradition of Apple, and, like Apple, are investments that will perform well in good times and bad. Read about another such investment, one The Motley Fool is bullishly calling its top stock pick for 2012, in this special free report, aptly titled "The Motley Fool's Top Stock for 2012." Get your copy while the stock is still hot by clicking here now.
At the time this article was published Fool contributorJohn Grgurichis currently seeking help for his own Starbucks addiction, but owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the frantic front lines of capitalism on Twitter@TMFGrgurich. The Motley Fool owns shares of Starbucks, Amazon.com, and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, and Starbucks, as well as writing covered calls on Starbucks and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has a scintillatingdisclosure policy.
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