Before investing in a company, ensure you know its brand.
You should always focus on brands to which people feel emotionally attached, says David Winters, CEO of Wintergreen Advisers in Milwaukee, WI.
Read: Don’t skimp on branding
This is important since brands “give compan[ies] pricing power over time; people will pay more for brands they love,” he says. Winters favours “companies that appeal to consumers on a long-term basis” since they often produce premium products.
Global jewelry giant Cartier is one such company, says Winters, and it’s been working on its brand since the 1800s. Through resonating with clients, the company has formed one of the “most valuable, important and endurable brands in the world.”
Cartier customers are willing to pay top dollar for anything that’s got the company’s stamp on it, including rings, necklaces and watches. Winters says that’s because people feel more attractive and successful when wearing Cartier products.
Winters also likes “brands that aren’t overly reliant on technology because [it] changes so rapidly,” says Winters. But that doesn’t mean people should shy away from all technology-related companies, he adds.
Consider that watchmakers like Swatch use inherent technology that has stayed the same for a long time. Though the company creates new styles, the underlying design of its products doesn’t change much.
Winters says Swatch offers low-, medium- and high-range products. He finds “they’ve built a diversified portfolio so people can identify with [its] brands.” Take Swatch’s Omega brand: that product is the watch of James Bond and is popular among fans of the movies. The company also has higher-end offerings.
Winters adds consumers purchase items like watches to show off their individualities or successes, especially when they live in regions where they aren’t able to buy fancy cars and houses.
When evaluating any company, Winters says there are three key factors to consider: whether its economics are good or improving; whether management is focused on company investors; and the quality and prices of its products. If the outlook is good for the business, it’s likely worth investing in.
Winters warns investors to stay away from brands that haven’t yet proven their durability.