Don't Chase the Next Big Thing; Look for the Best Brands

Some of the best stocks in the market are also the best business brands. Even in bad stock market conditions, many have turned out to be excellent wealth creators, and not just long-term, but over the last few years—and months. You might consider Starbucks Corporation (SBUX, Financial) to be a $40.0-billion mature company with its big growth story over, but the company and its shares are still doing great on the stock market. Starbucks has been one of the stock market’s best stocks; it’s been going straight up since the financial crisis, more than quintupling.

Another well-known brand, NIKE, Inc. (NKE, Financial) has been one of the market’s best stocks in recent years. You’d think that business might be slowing for a running shoe maker, but the stock was trading in the low $20.00-per-share range in the early 2000s, and then bounced between $40.00 and $60.00 in the late 2000s. Now it’s trading right around its all-time record high on the stock market of over $110.00 per share…and it is not expensively priced.

Other great branded companies that have been some of the best stocks on the market have been McDonald’s Corporation (MCD, Financial), Kraft Foods Inc. (KFT, Financial), Under Armour, Inc. (UA, Financial), lululemon athletica inc. (LULU, Financial), Coach, Inc. (COH, Financial), YUM! Brands, Inc. (YUM, Financial)… and the list goes on. A lot of these stocks may have had periods of consolidation or they stumbled for a little while, but, for the most part, they’ve just kept going up, and that’s why they are some of the best stocks in the equity landscape.

As we all know, the stock market can be a very unforgiving place to be. Yet, with all the noise and volatility in that marketplace, there are businesses out there that just keep trucking along and they continue to be some of the best stocks available. They may not go up the most when the rest of the stock market is on fire, but they often don’t go down as much either when the rest of the world is in crisis. NIKE and YUM! Brands both went down on the stock market during the financial crisis; but they recovered quickly, and then proceeded to go up tremendously. This is why they are some of the best stocks in the marketplace.

Over the years, I’ve come to admire consistency in the stock market, because it’s the one thing that’s so hard to find. Consider the best stocks during the Internet craze. They came, went up, and then crashed. The same thing happened to alternative energy stocks, then solar panel manufacturers, then U.S.-listed Chinese stocks. If you’re a stock market speculator on the right side of all these rolling trends, then you’re laughing; but it’s a very difficult thing to be good at consistently. And those who are good at it don’t advertise.

That’s why I view the best stocks in the stock market as those being the consistent performers. Many often pay dividends, too. It’s easy to make short-term bets on stocks. But, as I’ve mentioned before, most stock market speculators would probably have been better off just investing in Union Pacific Corporation (UNP, Financial) over the past decade, a boring railroad stock that’s up over five fold, not including dividends. This is better than trying to chase the next big thing.