You know how powerful a brand is when it conjures up a specific image, or replaces the general term for a word, or becomes a verb. For instance, today you’ll likely hear someone say “Google it” instead of “look it up”.

Another show in brand dominance is “Kleenex,” which has become a general term for facial tissue, even though the name Kleenex is a registered trademark of Kimberly-Clark (NYSE: KMB).

A more popular one these days is “Venmo,” as in “Venmo Me,” a reference to the peer-to-peer money exchange platform Venmo that’s owned by PayPal (Nasdaq: PYPL).

Or maybe you’ll hear someone ask for a “Coke” when referring to a soda, despite the name being a shortened handle for Coca-Cola, owned by the Coca-Cola Company (NYSE: KO).

The point is, if you’re looking for a product in a specific category, you’re likely to go with the product that has the more recognizable — and, presumably, trusted — brand name. For instance, as a new parent shopping for diapers you might be guilted into flocking to a brand that they’re aware of, such as Pampers.

I talked about the power of brands in this article, when I detailed 12 characteristics for identifying the world’s greatest businesses. The first trait I talked about was how brand loyalty allows the world’s greatest businesses to sell their products at premium prices.

Apple (Nasdaq: AAPL) — the world’s most valuable brand — is a great example. Although cheaper alternatives exist, more people will pay a premium for one of Apple’s products. Thanks to the power of its brands, Apple has generated some of the greatest returns in stock-market history. By contrast, companies that compete solely on price are constantly under pressure to keep prices (and profit margins) low; otherwise, they risk losing customers.

Brand Power Can Lead To Market-Beating Returns

Forbes keeps a list of the world’s most powerful brand names. And honestly, it’s not a bad place to start if you’re looking for investment ideas related to this concept. But I think we can do better…

Take a stock like McCormick (NYSE: MKC), for example.

In more than 150 countries around the globe, people know McCormick’s brands at first sight. It’s a global leader in flavor with brands like French’s, Billy Bee, Frank’s RedHot, Lawry’s, Old Bay, Stubb’s BBQ, Thai Kitchen, and its own McCormick line.

Most individual investors don’t realize that all those seasonings in their spice rack add up to big profits for McCormick.

The company has cranked out more than $6.15 billion in sales, $2.3 billion in profits, and $787.5 million in free cash flow over the past 12 months. Not to mention it has been paying — and increasing — its dividend since 1972. In fact, it’s grown its dividend by 72% over the last five years.

And the thing is that most people have completely overlooked this company. When looking at the ownership breakdown of who owns McCormick shares, the individual investor doesn’t even register — 94% of shares are owned by institutions. The everyday investor hasn’t given shares of McCormick a second thought.

And that’s a shame since shares have returned 341% over the last 10 years — crushing the broader market by a mile.

Closing Thoughts

We all know that through good times and bad, folks will continue to buy seasonings to give their food a little flavoring. It’s easy, relatively cheap, and yet people flock to what they know and like… it’s that simple.

In the article I mentioned earlier, there is an important point that still applies:

If you boil it all down, our ideal stock is a company that dominates its market, provides a product or service that is essential to daily life, and returns the bulk of its cash to shareholders in the form of dividends and share buybacks. When you can pick up these types of stocks at fair prices, you’re all but ensured to reap the rewards over the long haul.

To put it simply, this is the type of stock you want to have in the core of your portfolio. And it may sound simple, but a company with strong brand power can go a long way towards delivering the goods for investors.

I’m sure MKC — and other stocks like it — will continue to do well for investors for years to come. But once you have a handful of holdings working for you like this, then you might be looking for some ideas with even more upside potential…

That’s where my annual list of investment predictions comes in.

You may remember last year’s report…

My team and I released seven bold investment predictions. Our calls on copper, pipelines, crypto, and timber returned up to 391%… (and most of them are STILL a buy!) Now, we’ve just released an a brand new set of predictions for the coming year that could turn a modest investment into small fortune.

To put it simply, these could be my most profitable predictions yet… Click here for the full story.