How to Buy Great Companies

The Google Profit Loophole

Google stock is pretty pricey... sitting around $700 per share right now.

However, if you know about the profit loophole known as "Internet Royalties," you could actually bank $2,058 per month.

You don’t have to own Google stock either. And you don’t have to sign up for any programs or fill out any forms.

The best part is you can get started for less than $100.

Check out how to get started collecting these "royalties" today.

My grandfather was a Buick man. I was around 20 when he died, and all I remember were Buicks. My mom told me his love affair with Buicks started in the 1950s, and he never wavered.

I don’t know why, but people have a tendency to find a brand they like and stick with it. If you like Ford trucks, you’re not buying a Chevy...

If you hit Titleist golf balls, you’re not going to like the feel of a Slazenger...

If the bar is out of Jim Beam for your bourbon and ginger, you just might order a beer rather than have Jack Daniels in your ginger ale...

That’s how we are with our brands. We like what we like, and we are loyal. We don’t buy just "anything else."

That’s why great brands often become great companies... and great investments. Once you have a large contingent of loyal customers, you essentially have built-in revenue. And you also have the ability to raise prices, which means revenue and earnings will rise over time.

One of the cornerstones of my Wealth Advisory income and dividend newsletter is great companies. They are the perfect way to go about long-term wealth building.

Over the last couple of years, Wealth Advisory subscribers have been treated to some fantastic profits from some of the world's greatest companies. There's Starbucks (NASDAQ: SBUX), up 157%...

There's Boeing (NYSE: BA), up 114%...

We've got the world's most profitable and best-run solar company, First Solar (NASDAQ: FSLR). That one's up 42%.

We have two of the best-run REITs available to investors today, Realty Income Trust (NYSE: O) and Omega Healthcare (NYSE: OHI). These two are up an incredible 218% and 178% for Wealth Advisory readers.

Over the last few months, we've used the stock market sell-off to add more great companies to the Wealth Advisory portfolio, like Disney (NYSE: DIS) and Whole Foods Market (NYSE: WFM). Both of these companies have loyal customers and can be counted on to execute their business plans to near perfection, because management is fantastic.

Today, I want to tell you about another company that is achieving greatness and should be a big winner for you over the next few years.

Do You Know This Great Brand?

This company was founded in 1996 in Washington, D.C.

Click Image to Enlarge

The founder drove up and down the East Coast, peddling his products out of the trunk of his car. That first year, he did $17,000 in revenue. Probably not too bad for a first year. But in 2015, revenues grew to over $3.8 billion.

He even sent free samples to college friends of his that had continued on to play in professional sports leagues.

In 1998, this company got its big break. Its products were featured in the movie Any Given Sunday.

In 2015, Under Armour became a household name. And it should be a name every investor recognizes: Under Armour is the second largest and most profitable athletic apparel company in the United States and one of only two companies in the S&P 500 with 21 consecutive quarters of at least 20% growth.

Taking Aim at Nike

These days, everywhere you go, you see a man, woman, or child sporting the now-famous UA logo. Kids especially love UA, and many of them will likely be customers for life. That's how Under Armour will achieve its primary goal: to take Nike out of the number one spot in sports apparel.

At first glance, this seems optimistically like a David-and-Goliath scenario — Under Armour is an $18.86 billion company, while Nike boasts a gargantuan market cap of $103.85 billion. Taking out Goliath might seem like a pipe dream.

But if you dig a little deeper and compare the performance of the two companies, the odds even out a bit... Actually, they turn in the smaller company’s favor.

UA is doing everything right, and the only thing keeping archenemy Nike ahead is its 16-year head start. But Under Armour is catching up quickly, and it won’t be long before it overtakes the lumbering giant.

Under Armour (in red) is growing much faster than Nike.

UA has amassed an incredible lineup of endorsees. It’s got golf’s biggest rising star, Jordan Spieth. It’s got one of the best NBA players and leader of last year’s Champion Golden State, Steph Curry.

Under Armour has Tom Brady, Tony Romo, and Super Bowl winner Cam Newton. It’s got three-time Cy Young winner Clayton Kershaw, four-time skiing gold medalist Lindsey Vonn, and just wait until you hear the buzz about Michael Phelps at the next Olympics...

But the company is retooling its entire footwear division in order to scoop up more market share from rival and industry top dog Nike. The shoes are reported to be the most comfortable athletic shoes ever, and sales from Christmas doubled from the prior year.

Women's apparel and soccer are the next challenges for Under Armour. Women are obviously an important market for any apparel company. And if it can succeed with the soccer market, it can get the global attention it now lacks.

Now, the only issue with UA is valuation. It’s not cheap. The forward P/E is 65. Earnings growth rates are set to expand, and margins are also set to improve. Still, you should look for pullbacks and general market weakness to grab shares of Under Armour.

Until next time,

Briton Ryle

@BritonRyle on Twitter

An 18-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.