Only companies with a strong brand or unique know-how benefit from this ability to set their prices without impacting demand and thus preserve their margins.
Stock market values with pricing power already have valuable advantages in normal times but even more so in inflationary periods (as has been the case for several months).
We have all known for a long time this famous Pricing Power in the luxury sector, of which LVMH is a perfect example with its portfolio of strong brands.
What is interesting is that this advantage now applies in many sectors and is therefore no longer reserved for luxury products.
In our opinion, the brand is a keystone of Pricing Power, we analyze the evolution of Web searches by Internet users around the world over 5 years (thanks to Google Trends) for each sector of activity.
Here are 3 examples of the best companies/brands on the 2017-2022 backtest, and the subsequent stock market performance:
Top 50 Biotechnologies: NOVO NORDISK +55% over 1 year as of December 1, 2023 thanks to its 13 brands:
Top 50 Construction: SAINT-GOBAIN +33% over 1 year as of December 1, 2023 thanks to its 13 brands:
Building Products of Canada
Top 50 Public Services: ENGIE +11% over 1 year as of December 1, 2023 thanks to its 8 brands:
Gaz de France
If you want to test other sectors and back-test before planning, go to our TOP BRANDS section.
Past stock market performance is no guarantee of future performance.