While some investors prefer to buy the 'hot' stocks that are riding high and in favour with the market, other investors choose to focus their attention on out of favour stocks that potentially offer significantly more value for money.
Brand names have been recognised for many years as desirable assets because they provide certain advantages to their owners. These advantages can include an ability to charge a higher than average price for the product and customer loyalty that can lead to both repeat purchases and a positive feedback loop.
While the value of a 'brand' is well understood by investors, for different reasons each of these four companies has faced pressure in recent times, which has in turn led to their share prices trading near their 52-week lows. While those pressures are likely to continue, it's possible that much of the bad news is now reflected in their share prices making them good candidates for investors' watch lists.
OrotonGroup (ASX: ORL) owns the upmarket Oroton brand, which is particularly well known for its leather handbags. The company recently lost the Polo Ralph Lauren license in Australia but has quickly replaced this with agreements for Gap and Brooks Brothers. The loss of Polo is indeed significant, but with the stock trading at a four-and-a-half year low and the expansion of Oroton into Asia and Gap and Brooks Brothers across Australia, there are reasonable prospects ahead for the firm.
Coca-Cola Amatil (ASX: CCL) is the bottler of Coca-Cola in Australia and Indonesia. With one of the world's most recognised soda brands and a growing alcoholic beverages division the future outlook of the business is far from dire. With the shares trading near their low point of the past four years, now would be a good time for this stock to be on long-term investors' watch lists.
Goodman Fielder (ASX: GFF) is probably one of Australia's largest brand owner's, with many iconic food labels under its management. Some of its best-known brands include Praise, Meadow Lea and White Wings. The company has faced pressures from both a stretched balance sheet and tough competition from 'private label' supermarket products. Given the maturity of the market, Goodman Fielder's growth potential is low unless it can expand into overseas markets, however the high level of consumer recognition amongst its branded products should provide for a defensive revenue stream.
Pacific Brands (ASX: PBG) is the owner of the much loved Bonds brand. The company has had a difficult few years as it has adjusted its business to offshore manufacturing and to changes in the retail environment. While headwinds will likely continue to prevail for the firm, with the stock on a historic price-to-earnings ratio of less than eight times, investors don't appear to have to pay any premium to own this iconic Australian label.
Foolish takeaway
Certainly not all brands are created equally, nor do all brands ultimately stand the test of time. However brand power can be a fantastic attribute for a product, which can make a company more valuable than a generic competitor.
