Friday, 29 May 2015

The top 100 brands in the world (part 2)

After looking through the top tenth of the amazing BrandZ top 100 brands in the world analysis (link here) in this part of the analysis I will look at the brands ranked 11-25:

As in part 1 I am going to compare brand value to EV (market cap plus net debt) and see what proportion of this EV can be attributed to the brand value per se and what proportion is more...operational.  The broad rule of thumb is that a high brand value of a company's EV may highlight value...especially if that brand value is going up (interestingly true for all the above list except Amazon and ICBC).  

So what are the results? (brand value shown as a % of total company EV)

Tencent 40.7%
Facebook 33.7%
Alibaba 30.9%
Amazon 30.9%
China Mobile 29.0%
Wells Fargo 33.9%
General Electric 21.5%
UPS 53.6%
Disney 21.6%
Mastercard 39.6%
Baidu 61.3%
ICBC 13.1%
Vodafone 27.1%
SAP 40.2%
American Express 33.2%

Well that was interesting.  As before here are the top four.  Unlike the top 10 brands only two have over half their market cap covered by their BrandZ brand value:

Baidu 61.3%
UPS 53.6%
Tencent 40.7%
SAP 40.2%

So are these stocks cheap then?

The last time I mentioned Baidu on was back in January when I observed:

'Good graphic on the market share of China's top search companies (I must re-review Baidu again when they have their next set of numbers)...'

Yes, I must review Baidu.  The brand analysis makes this very clear. 

Next up is UPS.  Way back over a year ago I mused that 'any material plunge below US$100' would be a buying opportunity for the important global logistics firm.  

And what have we seen since then?  Well over the last year a share which has been either side of US$100.  That sounds worthwhile reviewing too. 

Tencent I have reviewed recently (link here) and I await a lower share price here.  Interestingly a filter of 50%+ brand value of market cap would have captured a good buying opportunity earlier this year...

Finally, SAP.  It has been a while since I last wrote on the stock on this site but elsewhere I have undertaken some research and was positive after the Q4/FY numbers publication.  At prevailing I am more neutral but again a filter of 50%+ brand value of market cap would have captured a good buying opportunity earlier this year.  Worth noting down.  

From part 1 I observed the need for a review of Visa to be written (and this will be forthcoming later today).  From part 2 my observation is that Baidu and UPS should also be stocks to focus on.  Research thoughts on these two entities will therefore be published in the next few business days.  

Brands: a good filter inspiration for stock pickers.  

(Part 3 will focus on ranks 26-50).  

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