Not every superlative means that a stock is actually super. In one new ranking from Consumer Reports, the "winning" stocks could be well worth avoiding.
The venerable magazine's online offshoot The Consumerist released the final results of its yearly version of the March Madness tournament. The site pits brackets of companies against one another, gathering reader votes on its way toward a climactic showdown for The Worst Company in America. Last week, BP
That's one bad reputation
With the anniversary of the Deepwater Horizon accident and subsequent Gulf of Mexico oil spill upon us, BP's dishonorable mention seems perfectly timed.
As much as some corporate managers seem to think that the public has the collective attention span of a sand flea -- witness Transocean
Hot on the heels of being named America's worst company, BP turned around and sued Transocean, Cameron International, and Halliburton
In a possible attempt to regain our favor, and appease federal and state governments in the process, BP has pledged a further $1 billion for Gulf Coast restoration. Just don't forget that it's also seeking to gain billions from the business partners it's now suing.
In the final showdown, BP beat out Bank of America
If you're curious about what other companies earned honorable mentions in this grim competition, Ticketmaster and Comcast
When companies stir up increasing amounts of ire among the customers on whose patronage they depend for survival, investors should take notice.
One way or another, negative consumer sentiment will almost always erode sales growth over the long haul. Even if customers can't reject a corporate baddie now, one day a rival will come along, promise better treatment, and poof! Bye bye, customers. We could probably call this The Blockbuster Principle, since the video rental chain's dismal fate stemmed almost entirely from its own customer-unfriendly behavior.
Whether you're seeking the bottom of the barrel of the cream of the crop, sifting through stocks to find these extremes can definitely help your investing. Several organizations attempt to quantify different forms of goodwill in the corporate realm. For example, Harris Interactive releases an annual Reputation Quotient score, and Corporate Responsibility magazine releases its "100 Best Corporate Citizens" list on a yearly basis, tracking companies on a variety of metrics such as employee relations, corporate governance, and many other positive factors.
Such data can make a great starting point when conducting investment research. Last year's top company in Harris Interactive's Reputation Quotient survey was Berkshire Hathaway
Weed "the worst" out of your portfolio
Intangibles add art to the science of investing. Even though such factors' very nature makes them difficult for investors to quantify, elements like customer goodwill can still make a measurable difference in a company's success in the marketplace.
When it comes to superlative stocks, investors should try to weigh customer satisfaction and other "softer" statistics to find the best prospects for their portfolios -- and avoid the worst.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on corporate governance.
Berkshire Hathaway is a Motley Fool Inside Value recommendation and a Motley Fool Stock Advisor pick. The Fool owns shares of Bank of America, Berkshire Hathaway, and Transocean, and through a separate account in its Rising Star portfolios, it also has a short position on Bank of America. Try any of our Foolish newsletter services free for 30 days.
Alyce Lomax does not own shares of any of the companies mentioned. For more on this and other topics, check back at Fool.com, or follow her on Twitter: @AlyceLomax. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.