Amazon.com has continued to grow at an excellent rate as it has branched out into new categories of products and services, but it is not the only company to do so.
Just in time for Prime Day, Amazon.com Inc. AMZN,
was named the world’s most valued brand in the 2021 Kantar BrandZ Top 100 Most Valuable Global Brands report. You can access the report here and it’s an interesting read.
Apple Inc. AAPL,
Amazon.com Inc. AMZN,
Netflix Inc. NFLX,
and the holding company Google Alphabet Inc. GOOG,
Microsoft Corp. MSFT,
which is often grouped together with FAANG values, is also in the top 10.
Only Netflix among the FAANGs was lower on the list, ranking 24th. Not bad.
Here’s a look at the growth in sales and free cash flow of the 10 Top Valuable Brands (plus Netflix) over the past five full calendar years.
For fast-growing companies, investors usually don’t focus on profits because the companies don’t focus on profits. Key figures for investors may include subscribers or other units, but they all have revenue in common.
Leaving the list of the 10 most valuable brands in the order determined by Kantar BrandZ (and adding Netflix at the bottom), here are the compound annual growth rates (CAGRs) of sales over the past five full calendar years:
The raw figures in this article are all in US dollars.
Alibaba Group Holding Ltd. BABA,
is the five-year sales winner, with an incredible 44.34% CAGR. Facebook ranks second at 36.82%. What might surprise you is to see a low single-digit growth rate for Apple and a decline in sales for McDonald’s Corp. MCD,
which was in part the result of the “refranchising” of restaurants that were directly owned by the company.
Free movement of capital
Free cash flow is the cash flow remaining in a business after planned capital expenditures. This is an important number for investors because it is money that can be used for expansion or acquisitions. It can also be used to buy back stocks and increase dividends.
Leaving the group of 11 companies in the same order, here is the free cash flow per share CAGR for the 2015-2020 calendar, except for Alibaba, for which the annual figures available are from 2014 to 2019:
For free cash flow per share, Facebook is the winner over five years, with a CAGR of 30.89%. Again, Apple and McDonald’s are single digits.
Love of Wall Street
Analysts working for brokerage firms base their ratings on their estimates of sales and earnings growth. They set 12 month price targets. It can be a short time, especially considering how quickly most of these companies have grown and the fact that any stock can have a bad year.
For this group of 11 premium brands, opinion on Wall Street is overwhelmingly positive.
Here’s a summary of Wall Street analyst ratings and price targets for this group of 11 stocks:
You should do your own research before considering an investment in any stock, to make up your own mind about how competitive a business will be over the next five to 10 years.
Don’t miss: The biggest player in this little-known stock market has a 9.7% dividend yield