Invest In Companies Whose Products You Love

Published in Investing on 5 September 2011

You are the best test of quality.

Investing is a difficult game. It's difficult because you have to predict the future. Which company is going to boom in the years to come? Which business's products are going to be the most popular?

You can mug up on company reports, evaluate sales figures or read the latest financial news, but all that can tell you only so much.

Perhaps the best way to assess a business is to try it products for yourself. Put another way, you should invest in companies whose products or services you love. If you are impressed by the quality, the chances are that others will be too, and the company will thrive.

You will, effectively, be putting into practice something Fools have been advising for years: you will be doing your own research. Don't take anybody else's opinion on an investment seriously until you have seen what the company does for yourself.

Here are a few personal examples to show that I really am practising what I preach.

SuperGroup

I only started buying Superdry clothes recently but, I must admit, I absolutely love them. The first thing that strikes you is the quality. And what also stands out is the branding. Whereas other clothing concerns have rather discrete labels and brands (think of the subtle Levi's tab), the Superdry marque shouts from the highest rooftop.

There are large, unmistakeable logos on Superdry's signature tee-shirts, all variants on that vintage Americana image that Superdry has made its own. The clothes come in a wide range of often gaudy colours. The styling and patterning set the standard.

I think the company that owns Superdry, SuperGroup (LSE: SGP), brands its clothes in the same knock-out way that Coca-Cola (NYSE: KO.US) brands its fizzy drinks. SuperGroup owes its branding style more to Fast Moving Consumer Goods than traditional clothes retailing.

And the fact that SuperGroup's sales continue to rocket shows the style is working.

You could argue that as soon as people like me (a 40-year-old dad) start buying Superdry clothes, the brand is finished; it will have lost that vital ingredient of 'coolness'. But I would disagree.

Chief executive Julian Dunkerton is aiming to move Superdry from being 'yoof'-focussed to a premium label that is worn by the whole family, rather in the style of Ralph Lauren's (NYSE: RL.US) Polo brand. Given his track record so far, I wouldn't bet against him.

BSkyB

Just as with Superdry, I am a recent convert to Sky television. I love the variety of content. I love the simplicity of Sky+. And I love high definition.

"Build it and they will come" said the voice in Kevin Costner's head, in Field of Dreams. That is precisely the philosophy at British Sky Broadcasting (LSE: BSY). Rupert and James Murdoch have gone about collecting more and more high-quality content. And they have packaged it with some of the best technology in the world.

The end result is a formidable line-up of programmes, whether you want sports, movies, music, documentaries or kids programming, backed up with convenient and very reliable technology.

Personally, I am a big fan of high definition. For me the change up from standard-definition to high-definition television is almost as radical as the move from black and white to colour -- once you start watching in high def you will want to watch it all the time. And this is Sky's trump card, as it has more than 50 HD channels available, compared to a paltry four for Freeview HD and five for Freesat HD.

As the offer from Sky improves all the time, I can see more and more people, just like me, being willing to splash out for premium quality television. And we'll all be contributing to BSkyB's overflowing coffers.

Domino's Pizza

So, you're wearing the latest Superdry tee-shirt, and you're sitting on the sofa watching Sky. What else do you do? Well, order a pizza, of course!

There's nothing quite like a Domino's Texas BBQ pizza on a Saturday night. And not only is the pizza delicious, but it's just so easy and convenient to order online. Plus you can choose extra toppings or even (relatively) healthy low-fat cheese with the click of a mouse.

In today's society, where speed and convenience is at a premium, no wonder Domino's Pizza UK & IRL (LSE: DOM) has been so successful and has been growing at breakneck pace for the past decade.

I love the product so much I have invested in the company. To be more precise, I have invested not in the UK concern but in the Swiss and Polish versions: Global Brands (LSE: GBR) and Domino's Pizza Poland (LSE: DPP), respectively.

I know that Domino's has a market-beating product, and I can see that it is aiming to reproduce the incredible success it has had in the US and UK abroad. It is just starting out in Switzerland and Poland, and in my mind there is nothing stopping it replicating its astonishing growth in these new markets.

More from Prabhat Sakya:

> Prabhat owns shares in SuperGroup, BSkyB, Global Brands and Domino's Pizza Poland.

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

ANuvver 05 Sep 2011 , 11:27am

Sky - high quality programming?

I got it for 24. Since then it's been an endless stream of "a load of idiots mysteriously stranded on a desert island - and best place for them", "sexy forensic investigator with a troubled past", "hard-looking actors waving assault rifles around like hairdryers", "he's a journalist/lawyer/private eye/politician/high school nerd but wait - he's actually a vampire!", "And so is everyone else!", "Apart from the ones that are superheroes", "I'm a celeb, watch my carcrash life in real time", "I'm an immortal metrosexual spinoff from Dr Who, and that's a reason for you to care about the cardboard characters clustered around me and equally cardboard plot", "F***ing Zumba and the Fatass Pilates Chair constantly modelled by gurning California zombies that never needed the products in the first place". Followed by a triple bill of "sexy forensic investigator with a troubled past - but she's a vampire!". "Or is she?". "No, she's a he!"

"I can teech j'you to e-spice up j'your body!"

Pop is eating itself. Good business, though.

AleisterCrowley 05 Sep 2011 , 2:51pm

Watch Sky ? I'd rather nail my head to a tree.

rober00 05 Sep 2011 , 4:37pm

I have only seen its contribution on freeview but the repeat of repeats there s good reason to avoid it like the plague!!!!

growingmyown 05 Sep 2011 , 8:18pm

Prabat,

Assessing a company's products is certainly a sensible thing to do and fits with the 'buy what you know' philosophy.

However to suggest that you should try out a company's products and if you like them, buy the shares is truly disingenuous.

Why? Because a company may make products that you like. But is the business as a whole performing well? How about the shares?

If that share is hugely overvalued at the time you do your company product test then surely you would not advise a reader to buy?

TMG

jaizan 05 Sep 2011 , 8:50pm

There are many companies who make good money out of other people, whilst I personally don't touch their products.

BAT, Sky, McDonalds, KFC etc.

hydranger 05 Sep 2011 , 9:59pm

This goes against another article (which I'm sure was also on motley fool) which said that if you thing a company has "quality", buy its products not its shares. An example given was Rolls Royce - quality name, quality product, went bankrupt and had to be nationalised.
Really this article reads like a puff peice for the shares in question (or for Slater Growth fund, which famously holds all of these shares)
(Disclaimer: I have a big holding in Slater Growth fund!)

hydranger 05 Sep 2011 , 10:23pm
Basia02 06 Sep 2011 , 3:11pm

Different things for different people - I have never bought a pizza outside of a supermarket in my life - which is quite a long time. HD=Hardly any Difference and SKY=C..p. Supergroup - I cannot understand what the fuss is about overpriced T-shirts - I believe companies who advertise on their wares should pay me for carrying the advertising! This is a company heading for all fall. Get it in primark for with 80% off.
My point - never base your investment decisions on personal choice - you may be wrong. My forecasts include - CDs will never take off! Windows too slow for people to ever use it. I join the man at IBM who sold Microsoft the rights to their operating system because PCs will never become a mass market!

santori 06 Sep 2011 , 9:14pm

I like reading books and listening to CD's but i would not buy HMV.

RobinnBanks 08 Sep 2011 , 9:07am

I buy clothes to keep warm, not 'cool.' They can keep their gaudy tee-shirts; and pizzas are junk food. Reach for the Sky if you're not content with over 30 freeview channels and are prepared to pay for it.

Benatar 08 Sep 2011 , 6:23pm

Diageo - love a lot of their products (hic!!) - good dividend growth, great brands, great geographical coverage, consistent growth. And when markets tumble, rather than throw youself out of the window, turn to drink!

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