Great Brands and Great Stocks: Part 1

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Interbrand this week released its updated 2013 brand rankings, which saw Apple leap to the No. 1 spot, followed by other tech players and, of course, Coca-Cola. Having a powerful brand is, obviously, an invaluable tool -- one that bewitches consumers and investors alike. And, over time, each of the five top picks have been great long-term holdings. However, a quick glance at Interbrand's top picks shows just two that have outperformed the S&P 500 this year. When it comes to stock picking, the lesser valued brands may have greater upside potential in the coming years. Here are a few to look at.

The Top 5 as ranked
The top five brands, according to the research and consulting firm, are as follows: Apple, Google, Coca-Cola, IBM, and Microsoft. Now, Interbrand's ranking is certainly not entirely based on investment performance (though the companies' financial returns do play a part), but it's interesting to note that only Google and Microsoft have outperformed the market at large. For reference, Google is up nearly 22% year to date, while the S&P 500 has gained slightly less than 20%. Microsoft has gained 20.5%. 

The biggest year-over-year riser in Interbrand's ranking, Apple, has lost one-tenth of its market value this year.

Looking further down the list gives investors a glimpse into brand names that are growing fast and whose stocks may not be as closely scrutinized by Wall Street analysts, and potentially offer investors greater upside potential.

A few good names
Coming in at No. 72 in the rankings, but also one of the biggest gainers on the list, is Prada. The 100-year-old luxury goods maker holds one of the most iconic badges to grace a purse, and is far from going stale.

In the first half of this year, net sales grew 7.6%, driven primarily by the Asia-Pacific region. Though China has slowed down in recent years, the region continues to offer very attractive growth prospects for all luxury goods makers. The core Prada brand saw its revenues rise 17.4%. During the period, the company opened 30 new stores, and it plans to continue its expansion on a global level.

Prada's stock isn't cheap, but its valuation on a trailing basis is lower than other high-flying big-name luxury goods makers, such as Michael Kors. Over the past two years, Prada has gained more than 100% in stock value, surpassing by a multitude the top five brands on the list.

Another icon, though in a different league, is Nike (NYSE: NKE  ) . No. 24 on the list, and growing 13% in brand points over the prior year, Nike is an absolute powerhouse stock -- gaining more than 42% this year. The company recently announced its earnings, and there was nothing but good news. Nike has refocused on its core brands and is seeing its Asian market stabilizing, along with solid growth in Eastern Europe. Nike is an industry leader and an innovator, with no signs of slowing down anytime soon.

For two more bullish picks from Interbrand's ranks, click here.

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