Legendary mutual fund manager Peter Lynch once coined the investing
strategy:
"Buy what you know."
The philosophy seems so simple and easy. But is
it?
If you eat three times a week at McDonald's, the
strategy goes, then you should buy the stock. If you wait in line
for hours to buy the latest Apple product, buy the stock. If you
run a blog dedicated to all the new drinks at Starbucks, then you
should buy the stock.
In other words, if you love the company's product,
then buy the stock.
But if it was so easy, everyone would do it.
Fundamentals still matter. You may have loved Krispy Kreme a decade
ago, but the company ran into trouble when it expanded too quickly
and the stock tanked.
A hot product sometimes doesn't translate into a
hot stock price.
Who Owns It?
If you were Warren Buffett and your favorite drink
was Coke, then it was easy to know what company to buy. You buy
Coke's stock. But what if your favorite drink was A&W Root
Beer? There is no A&W listed on the stock exchanges. So who
owns it?
This is where "buy what you know" can get
tricky.
It turns out, the A&W Root Beer brand is owned
by Dr. Pepper Snapple Group which also owns 7UP and Hawaiian Punch,
among other brands.
"Secret" Companies That Own Your Favorite
Brands
Love the Loft store? The Loft, which used to be
called Ann Taylor Loft, is owned by, of course, Ann Taylor. That
one is easy to figure out.
But did you know that Anthropologie stores are
actually owned by Urban Outfitters? You also may not be aware that
Athleta is owned by Gap.
Here's a quiz: who owns the following well-known
brands?
1. Tommy Bahama
2. Vilebrequin
3. North Face
4. Timberland
These famous brands are owned by 3 "secret"
companies you probably haven't heard of. Even better, these
companies also own, in some cases, multiple famous brands.
It also just so happens that all 3 of these
companies are expected to have double digit earnings growth this
year. Two out of the three are also Zacks Rank Buy stocks.
It may take some extra sleuthing to uncover the
companies that own these brands, but with these solid fundamentals
and growth projections, it's well worth the extra effort.
If your favorite brand also has great fundamentals,
why not "buy what you know"?
1. Tommy Bahama = Oxford Industries
(OXM)
Oxford Industries operates 121 Tommy Bahama stores,
including 15 restaurant-retail locations, Lilly Pulitzer with 21
retail stores, and the brands Ben Sherman, Oxford Golf, Arnold
Brant and Billy London.
On June 11, Oxford beat the Zacks Consensus for the
fiscal first quarter by 5%. It saw strength in both Tommy Bahama
and Lilly Pulitzer as Tommy saw 10% same store sales growth. It
opened its first two Tommy Bahama stores in Japan in the quarter,
which is part of its broader strategy to expand in Asia.
Forward P/E = 20.6
Fiscal 2013 expected earnings growth: 19%
Zacks Rank #2 (Buy)
![](http://staticzacks.net/images/zacks/blogs/1371156530_scaled_425.jpg)
2. Vilebrequin = GIII Apparel Group
(GIII)
GIII-Apparel can trace its history all the way back
to 1956 in New York's Garment District. Today, the company has a
portfolio of 30 licensed brands where it markets apparel,
outerwear, beachwear, luggage, women's handbags, small leather
goods and accessories.
But it also owns several retail brands outright
including Wilson's Leather and Vilebrequin, which it just acquired.
Vilebrequin, founded in 1971 in Saint-Tropez, is a luxury men's and
boy's luxury swimsuit retailer with stores in prestige locations
such as Beverly Hills, Paris, and Cartagena. GIII will be rolling
out women's swimsuits this summer which the analysts believe will
significantly add to the bottom line.
Forward P/E = 14.6
Fiscal 2013 expected earnings growth: 13.6%
Zacks Rank #2 (Buy)
![](http://staticzacks.net/images/zacks/blogs/1371156464_scaled_425.jpg)
3. North Face and Timberland = V. F.
Corporation (VFC)
V. F. Corporation has to be one of the least known
companies with famous brands out there. Yet, it is one of the
largest apparel retailers in the world. In addition to North Face
and Timberland, it also owns Wrangler, Vans, Lee and premium jeans
maker 7 For All Mankind and athletic clothing maker lucy, to name
just a few.
On June 11, the company released its 5-year revenue
and EPS targets. It is projecting compounding annual growth of 10%
through 2017. Its top brands are forecast to continue with their
double digit revenue gains. North Face is expected to grow at 12%
annually. Vans is expected to see 13% to 15% growth and Timberland
is expected to do 10%.
Forward P/E = 17.4
Fiscal 2013 expected earnings growth: 12.8%
Zacks Rank #3 (Hold)
![](http://staticzacks.net/images/zacks/blogs/1371156559_scaled_425.jpg)
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Tracey Ryniec is the Value Stock Strategist for Zacks.com.
She is also the Editor of the Turnaround Trader and Value Investor
services. You can follow her on twitter at @TraceyRyniec.
G-III APPAREL (GIII): Free Stock Analysis Report
OXFORD INDS INC (OXM): Free Stock Analysis Report
V F CORP (VFC): Free Stock Analysis Report
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