Legendary mutual fund manager Peter Lynch once coined the
"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
In other words, if you love the company's product, then buy the
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
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
"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
But did you know that Anthropologie stores are actually owned by
Urban Outfitters? You also may not be aware that Athleta is owned
Here's a quiz: who owns the following well-known brands?
1. Tommy Bahama
3. North Face
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
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
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)
2. Vilebrequin = GIII Apparel Group
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)
3. North Face and Timberland = V. F. Corporation
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)
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She
is also the Editor of the
services. You can follow her on twitter at
G-III APPAREL (GIII): Free Stock Analysis
OXFORD INDS INC (OXM): Free Stock Analysis
V F CORP (VFC): Free Stock Analysis Report
To read this article on Zacks.com click here.