How often do you see a corporation's logo proudly emblazoned on a bumper sticker? Or a worldwide outpouring of emotion over a CEO's death? Or people lined up by the hundreds, practically begging a company to relieve them of their hard-earned cash for the latest and greatest product?
I'm talking, of course, about Apple. Companies who inspire this kind of fierce dedication are apt to perform well for investors in both good times and bad. Following are three corporations that inspire loyalty in the Apple tradition, along with a look at how each is currently doing:
1. Whole Foods
Whole Foods was the first supermarket I'd ever been to that had employees directing traffic into and out of the lots. Yes, the Whole Foods in my old neighborhood was so busy that the company needed to employ what were essentially traffic cops to keep the incoming and outgoing cars flowing efficiently.
Whole Foods is well-known for its wide selection of organic foods, but it's not just that. The stores are hip and stylish, making for a truly unique shopping experience. And Whole Foods' prepared-foods section offers dishes that rival those of your favorite restaurants. By the numbers:
- Quarterly revenue grew a big 12.9% year over year. Compare this with peer Safeway
, which only grew its revenue at 6.2% YOY. (NYSE: SWY)
- Whole Foods' quarterly earnings also grew a big 33.4% YOY, while rival Safeway's quarterly earnings actually declined 6.1% YOY.
- Whole Foods has a little more than $849 million in cash on hand and only $19.33 million in debt, giving the company a very healthy cash-to-debt ratio. Safeway is quite the reverse on this metric, with $786 million in cash and $5.41 billion in debt. Safeway can at least reassure itself with the thought that, with interest rates as low as they are, money is cheap right now and so the company shouldn't be facing crippling debt payments.
Whole Foods' P/E of 39 is on the high side, but you're getting a lot of company for the multiple. Whole Foods has really tapped into something with consumers, and its numbers show it.
2. Under Armour
Under Armour is an athletic-gear manufacturer that's found its niche and is -- pun intended -- running away with it. Combining form with function, the company appeals to those who want their athletic gear to be functional as well as stylish. The company makes clothing, shoes, socks, team uniforms, and kids and baby apparel, as well as protective gear such as batting gloves and mouth guards.
Put simply, the people who like Under Armour like it a lot. They're zealots about the brand, as the numbers plainly show:
- Quarterly revenue for Under Armour grew a huge 33.9% YOY, while athletics-gear giant Nike
managed only 15.1% YOY -- good, but not Under Armour good. (NYSE: NKE)
- Under Armour's quarterly earnings grew an astonishing 41.9% YOY, while Nike only managed 7.1% YOY. Again, 7.1% isn't bad at all, unless you put it up against Under Armour.
- Under Armour has more than $175 million in cash and only $77.72 million in debt, for a very healthy cash-to-debt ratio. But with $3.2 billion in cash on hand versus $369 million in debt, here's a metric where Nike finally beats Under Armour. Frankly, both companies are managing their savings and debt well.
Under Armour's stock is trading with a P/E of 49. Again, this P/E is on the high side, but that's what happens with companies people are crazy about, and that's also why these types of companies perform well in both good times and bad.
What can I say about the kind of passion Harley-Davidson evokes that you don't already know? The in-your-face stock ticker "HOG" says it all. The people who ride these big, brash, loud-as-hell machines don't live to ride, they ride to live. (I must have read that on a Harley-Davidson bumper sticker at one time or another.) By the numbers:
- Quarterly revenue for the HOG grew a very healthy 9.3% YOY.
- The company's earnings per share were up an amazing 110% YOY.
- Cash on hand is $1.1 billion, with debt an unfortunate $5.73 billion. Again, as with Safeway, Harley-Davidson can at least solace itself with the thought that money is cheap right now.
The stock is trading at a very reasonable P/E of 18. Harley-Davidson is one of the quintessential American brands, with worldwide name recognition -- and that's important for its success.
Standing on the shoulders of Apple
Whole Foods, Under Armour, and Harley-Davidson. Three companies that, each in their own way, inspire brand loyalty in the tradition of Apple, and, like Apple, are investments that are apt to perform well in good times and bad.
My current personal favorite of the bunch, however, is Whole Foods. To me it seems this coolest-of-the-cool grocery business has tapped into an important, emerging national zeitgeist. More and more, people are beginning to think about and care about not only what goes into their food but also where it comes from. Also, the company, as you might expect, has a strong sense of social responsibility. Again, Whole Foods is brilliantly responding to an emerging zeitgeist. Style of presentation never hurts, either, and Whole Foods has this aspect of the grocery business down as well. The company is currently growing like mad, is managing that growth well, and -- I think -- has a lot more ahead of it.
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