The Three Most Important Stocks to Own

Great companies change the world as we see it, and investors in these businesses benefit from the profits they generate. Because of such realities, you spend hours researching today’s companies in search for the next Microsoft (MSFT) or IBM (IBM), so that you may retire rich on an exotic beach in San Juan while sipping your favorite tropical beverage, without a care in the world.

In order to ease your search, we’ll ditch the quarterly earnings reports and conference calls for a moment, and analyze the most crucial aspect of a successful business: the strength of its brand. A strong company brand translates into profits in the long run, and businesses build their brands by changing the world and earning loyal followers.

World changing service/product + Loyal Following = Strong brand + Company profits.

Now that we’ve defined the ultimate equation for long term company profitability, let’s look at 53 companies that you can buy stock in and make money with because these three large corporate giants a) have changed the world in some way, b) built up a loyal following to enhance word of mouth marketing and strengthen the global brand, and c) made lots of money in the process.

1. Google, Inc (GOOG)

Google’s founders Sergey Brin and Larry Page revolutionized the internet once Google began competing in the internet search market. Now Google owns nearly 50% of the world’s internet search share and shows no signs of slowing down in the future. Google not only makes searching the web easier, but offers numerous products and services that enhance the quality of human life worldwide. I use the following Google-owned properties on a daily basis:

Google Reader - helps you track RSS/Atom from one central location and saves time

Google Finance - aggregates financial content, data, and stock quotes for you all in one place

Google Adsense - allows you to earn revenue from your websites by displaying relevant Adwords advertisements on your webpages

YouTube - The internet video industry is the fastest growing advertising segment on the web. No wonder Google hustled to add YouTube to its portfolio of businesses.

The deep Google product pipeline, along with Google search, saves you time, money, and even help you earn some money in the process. Therefore, it’s safe to say that Google has made the world a better place to live in for lots of people worldwide.

Why buy GOOG stock? The web grows everyday, and Google will grow its market share of the world wide web.

GOOG 1-yr chart

2. Toyota Motors (TM)

According to CNN Money, Toyota is already the world’s most profitable car maker, and has nearly eclipsed General Motors (GM) as the world’s largest automotive maker. Kudos goes to Toyota’s management for developing an excellent unique value proposition: provide a long lasting, reliable vehicle at a low, affordable cost.

Nowadays, the world “cars” and “Toyota” have become quite good friends. Japan-based Toyota controls 15% of the US car sales market, and around 10% of the world’s car market.

Much of Toyota’s success stems from two popular models: the Toyota Camry & and Toyota Corolla. Combined with gas efficiency, longevity, and enough power to get the job done, the Camry and Corolla bridge the gap between cost and value quite nicely.

Toyota changed the world by placing less focus on the features of vehicles, and more focus on how much the consumer paid for vehicles. When companies care more about their customers than expensive price tags, their customers love them, forever.

Toyota set a goal for 15% world market share in the next 4 years, and they will most likely reach that goal with ease. If you’re unsure about Toyota’s global success, pay attention to the model’s and makes of the cars along the street as you commute to work or school. You may be in for a big surprise.

Why buy Toyota stock? - Toyota will pass GM as the largest car maker and will never look back.

TM 1-yr chart

3. Starbucks Coffee (SBUX)

Starbucks is an iconic brand that greets millions of people across the world every morning by a common gathering place for the working world. The average Starbucks customer frequents the Seattle coffee maker 4.2 times on average per week, making a strong case that Starbucks builds an extremely zealous customer base.

Even if you avoid coffee altogether, Starbucks offers wonderful coffee substitutes like hot chocolate, green tea, blended drinks, and specialty mixes like fruit smoothies. There’s also breakfast sandwiches, comfortable seating arrangements, and lively music playing in the background. You seek out Starbucks to relax and unwind, not seek out cheaper lunch alternatives (Did somebody say McDonalds?)

You can bet that Starbucks improves the lives of many people daily, and provides the needed “break” from the toils and responsibilities of normal day life. No one will give up their coffee break because of higher oil prices or economic slowdown; they would rather leave you to dwell on economic uncertainities while they enjoy a relaxing break from the real world.

Why buy Starbucks stock? - Starbuck’s global presence grows year after year (Starbucks has plans for India and Russia), and it plans to add more diverse products/items on its shelves like books, music, etc.

SBUX 1-yr chart

Disclosure: Author owns shares of SBUX

Comments

[raykorea1]

Am a frequenter of tearooms and coffee shops, but didn't go to Starbucks much. Think their prices are a rip off, and I don't much care for their food. They have tremendous competition. In fact, when I want coffee most of the times McDonalds or Dunkin' Donuts will do. Their food is better, so that's a big plus. Faster service, too. Java Ray

[Malkiel]

This "concentrating on iconic brands" approach will keep your money safe, but it isn't going to get you market-beating performance if you ignore timing. Outfits like Starbucks had their good ride last year and may be done for a while until they do some restructuring. You may as well own an S&P 100 index if you're just looking for "quality" and don't have the time to analyze their trajectory; the results will be just as good as owning several "iconic brands" in their varied stages of evolution, but more reliable and with less work.

I'm also not sure why gasoline refiners or Apple aren't "iconic" brands, given how fundamental their products and business models are, but you will beat the market handily with them over Starbucks for a couple of years to come.

[Swampthing]

One click navigation with your mobile device. Neomedia Technologies. My choice. Once call the next Google and next killer app. Just ask Robert Scoble or Scott Schaffer.

[Swampthing]

One click navigation with your mobile device. Neomedia Technologies. My choice. Once called the next Google and next killer app. Just ask Robert Scoble or Scott Schaffer.