According to the latest Brand Finance Australia report, Woolworths Limited (ASX: WOW) is still our most valuable brand, worth a whopping a $10,960 million.
Second place was Telstra Corporation Ltd (ASX: TLS) at $10,647 million, and Coles (owned by Woolworths’ number one rival Wesfarmers Ltd (ASX: WES)) came in at fifth place, with a value of $7,125 million.
Woolworths’ brand was able to again hold the top spot despite its value falling an incredible 10% — or $1,164 million — year-over-year.
In fact, in Australia’s top 10, Optus (coming in at number 10) and Woolworths were the only companies to see a fall in their brands’ value between 2014 and 2015.
However, the fall is likely to come as little surprise to Woolworths shareholders, who’ve watched on helplessly as the value of the supermarket giant’s shares tumbled 25% over the past 12 months.
A resurgent Coles, growing Aldi, struggling Masters home improvement business and the resignation of its Chair and CEO have each played their part in hurting the company’s standing in the investment community.
Indeed, despite being Australia’s largest consumer staples business with a sophisticated supply chain and wide profit margins, investors have turned their back on the $32 billion business that also owns Dan Murphy’s, Big W, Home Timber and Hardware and a range of other popular names.
1 investment I’d make before Woolworths
While I strongly doubt Woolworths’ best days are behind it, I think it has some work to do to stem the profit decreases and restore investor confidence.
Although I already own shares in the company, if I were weighing up an investment in the consumer staples sector, there’s one ASX investment I’d certainly consider buying first:
The Global Consumer Staples Exchange Traded Fund (ETF) offered by iShares.
ISGLCOSTP CDI 1:1 (ASX: IXI) is the ETF’s name on Google Finance, but it’s not as complicated as it appears.
ETFs are simply pooled funds used to invest in a basket of stocks. This particular ETF tracks the movements of the S&P GLOBAL 1200 Consumer Staples Index (INDEXSP: SPG1200-30) by investing a little amount in shares of each company included in the index.
Some of the largest holdings include:
- NESTLE SA
- Coca-Cola, and
- PepsiCo Inc.
Incredibly, just these three companies alone boast brands worth almost $US80 billion.
Ordinarily, Australian investors would find it very difficult to invest a portion of their portfolio in each of the 1,200 companies. However, the ETF makes the process relatively simple.
While its does cost 0.47% per year to hold the ETF, the estimated yield on the portfolio is 2.09%.
Buy, Hold or Sell?
I think the Global Consumer Staples ETF is a worthwhile consideration for investors who intend to invest their money for the long term (five years or more).
Indeed, while Woolworths may offer a superior dividend yield and trade at a cheaper profit multiple, the ETF is certainly one investment to which risk-averse investors should have some exposure.
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Motley Fool contributor Owen Raskiewicz has a financial interest in Woolworths Limited.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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