It might be the ‘real thing’, but Coke (NYSE: KO) has not been able to keep up with real brand power of new technology. After thirteen years of being on top, Coke moved to the third spot in Interbrand’s Best Global Brands report. Google (NASDAQ: GOOG) has moved in to the second spot while Apple (NASDAQ: AAPL) has received the top billing. Marking a stark shift the brand consulting firm has realized that though Coke might be more visible in the smallest of markets and its curly logo and red color might be identified in villages in Asia, but the dollar value of the brand has not kept pace with the times.
Interbrand values Apple’s brand at nearly a hundred billion dollars. This comes as no surprise – since there are competitors with similar products, which cannot even come to a close price point of Apple, primarily because of brand. The same, of course, holds true for Coke.
But the markets have not been kind to Apple. The stock is trading at a little over 12 PE – an extremely low number for a tech firm and a clear sign that the markets do not expect much growth from them.
We have been Apple bulls since the stock hit $400 – our estimates were that it is a $600 stock trading at a 50% discount. Since then, we have legendary activist investor Carl Icahn on our corner. And, there has been no reason to change our thesis, despite the 5C and 5S disappointments. Apple’s partnership with China Mobile, the world’s largest mobile service provider with its 700 million subscribers, is potentially much more accretive to the stock than a disappointing release. While the markets mostly ignored the news, for an industry where pricing power nearly completely depends on brand name, the latest release from Interbrand only adds to our thesis.