Teens And 20-Somethings Love Apple, Sony And Nike But Should Investors?

Apr 4 2014, 3:34pm CDT | by

Teens And 20-Somethings Love Apple, Sony And Nike But Should Investors?
Photo Credit: Forbes Apple

The 62 Brands Young Americans Love Most

Branding firm Moosylvania asked 1,000 people age 13 to 33 to name their three favorite brands. Of the 620 brands mentioned 62 came up five or more times. Apple was by far the most popular response, claiming 7.5% of the 3,000 possible answers. This does not include the people who answered iPad or iPhone, which also made the top 62. Next up was Samsung which claimed 4.8% of responses, Nike with 4.5% and Sony with 4.1%.

This 86 million strong age group controls $1.3 trillion in consumer spending, making them a prime target for companies with goods to sell. Moosylvania CEO Norty Cohen explained that while the sub-33 set sees themselves as independent, they are constantly seeking feedback from others and connect most with brands they see as friends.

But should young investors be buying up shares of their brand-friends? Only if they are prepared to love them for the long haul.

Of the 53 companies responsible for the brands named (like Apple, multiple Nike, Google, Gap, PepsiCo and Microsoft properties appear on the list) 44 are currently publicly traded. In recent years this group of stocks has underperformed the S&P on total return by a few percentage points. Where the S&P’s one-year total return is currently 24%, the brand group’s is 20%. This means if you invested $100 in the S&P a year ago you would have $124 today (including dividends), while you would end up with $120 by investing in your favorite brands.

Looking at the longer term, however, fortunes shift. The S&P’s five year total return is 147% versus the brands’ 240%. And going 10 years out the S&P’s 102% total reture is lapped by the brands’ 258%. So if the 13-year-olds surveyed invested $100 in the 33 relevant companies that were publicly traded when they were three years-old — ok if their parents invested — their untouched portfolio would now be worth $358. The same investment in the S&P would be worth $202.

Investor Peter Lynch famously argued that you should invest in what you know. These days a new generation is bringing a technological bent to Lynch’s credo. LikeFolio, for example, finds the brands that you and your friends are talking about via Facebook and Twitter and uses those mentions to help you find investing ideas. Co-founder Andy Swan says that investing in what you know “is not a silver bullet” but people have more “predictive power on companies than they might realize.”

Swan and his team found a huge increase in the amount people were talking about loving their Tesla Motors cars (which does not appear on the favorite brands list) months before the stock took off. He thinks Nike has room to grow off of increased mentions of relatively new products like Nike+ and Nike FuelBands that Wall Street hasn’t fully priced in. On the other hand negative chatter about Apple has picked up alongside the stock’s slow down.

Recently Facebook and Under Armour have  been among the best performers of the list bringing in one year total returns of  134% and 118% respectively. But on the flip side Aeropostale, JC Penney (owner of Sephora) and American Eagle Outfitters have lost 60%, 39% and 30% respectively.

A decade ago Facebook and Under Armour weren’t publicly traded (Facebook was just a few months old). So the companies with the best ten-year returns included Apple at 3,977%, Samsung at 668% and Amazon at 624%. Fan favorite Nike also has strong returns at 348%, but Sony has lost 52% of its value.


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