Famed investor Warren Buffett has emphasized finding companies with wide-moats to invest in — companies with business models that are not easily replicated. Failing that, perhaps investors can seek out companies with wide-moat customer bases — rabid, cult-like fans that will stick to a company’s product despite rising competition.
Apple Inc. (NASDAQ:AAPL), Research In Motion Ltd (NASDAQ:BBRY) and Whole Foods Market, Inc. (NASDAQ:WFM) all have cult-like following. Even if these companies should be pressured by competition, their base of fans could ensure demand for their products.
Apple’s cult has become cliche
Courtesy: Apple Inc. (NASDAQ:AAPL) Press Info
At this point, to acknowledge Apple Inc. (NASDAQ:AAPL)’s loyal fanbase is a cliche. That said, it’s still entirely true.
Apple’s ability to draw crowds to its stores on the day of product launches is legendary. When its iconic founder Steve Jobs passed away, consumers flocked to makeshift shrines in front of Apple stores to mourn his death.
Apple might be one of the only companies to have several well-established blogs dedicated to it, including the aptly named “Cult of Mac.” Videos of Apple’s old ads on YouTube have millions of hits, while Interbrand gave the company the number 2 spot on its list of top brands for 2012 (second only to The Coca-Cola Company (NYSE:KO)).
Perhaps the reason Samsung’s anti-Apple ads have received such praise — the ones where Apple Inc. (NASDAQ:AAPL) fans are portrayed as tech lemmings, mindlessly purchasing the next iGadget — is because they aren’t too far from the truth.
That said, investors can take solace in the Apple cult. Even if another device should best the iPhone or iPad, Apple Inc. (NASDAQ:AAPL)’s loyal fans will continue to pay up for the company’s products. Many Apple Inc. (NASDAQ:AAPL) bulls have argued that the company’s device ecosystem protects against competition; in reality, the company’s fanbase may be a bigger force than iPhone/iPad compatibility.
Research In Motion Ltd (NASDAQ:BBRY), BlackBerry has fallen out of favor, but not with its fans
Once known as Research in Motion, Research In Motion Ltd (NASDAQ:BBRY) used to be on top of the smartphone world. The rise of Apple Inc. (NASDAQ:AAPL)’s iOS and Google Inc (NASDAQ:GOOG)’s Android has taken its toll on the Canadian handset maker, but its die-hard fans remain loyal to the cause.
During its launch event for the Research In Motion Ltd (NASDAQ:BBRY) 10 operating system, the company emphasized its cult-like following, showing among other things, the editor of CrackBerry.com getting his haircut (he had pledged not to cut his hair until BlackBerry 10 arrived). While Research In Motion Ltd (NASDAQ:BBRY) may not have the raw number of websites dedicated to it, CrackBerry is up there with the best dedicated company websites.
The Guardian reported that Eric Schmidt, chairman of Google, is somewhat of a closet BlackBerry fan — using the device over one powered by his company’s Android operating system. Schmidt is a fan of BlackBerry’s iconic QWERTY keyboard.
Certainly, Research In Motion Ltd (NASDAQ:BBRY)’s cult status didn’t save its stock from the tremendous drop it experienced over the last few years. Neither did it save the jobs of the company’s former dual-CEOs, Jim Balsillie and Mike Lazaridis.
But those investors who are banking on the company’s new Research In Motion Ltd (NASDAQ:BBRY) 10 phones must be hopeful that once loyal customers can be brought back into the company’s fold.
Whole Foods is the poster child of the organic food cult
Even though a myriad of scientific studies have cast doubt on claims that organic foods are healthier and better tasting than non-organic ones, a significant portion of the US consumer base remains dedicated to eating organic.
The strength of Whole Foods’ brand might be suspect, but the dedication to organic foods certainly isn’t. And Whole Foods, as the largest organic supermarket, benefits from the growing infatuation with organic food.
Other major supermarket chains, such as The Kroger Co. (NYSE:KR), have made inroads in the organic space, dedicating whole sections of their stores to organic products and carrying organic brands. Still, Whole Foods retains an edge with its larger selection and established reputation. Even though not every product sold in a Whole Foods is organic, most consumers equate the company’s name with organic foods.
It certainly isn’t cheap to shop at Whole Foods, but as the dedication to eating organic grows among consumers, Whole Foods stands to benefit.
Investing in cult stocks
Buffett’s rationale for investing in wide-moat stocks is that these companies have built-in protection against failure. Coca-Cola, for example, can survive tough times because it is the only company that can produce its iconic soft drink.
Cult stocks have similar properties. Even if competitors can make inroads into their territory, companies with cult followings can remain sold investments as consumers dedicated to the company’s products continue to buy.
Of course, as in the case of Research In Motion Ltd (NASDAQ:BBRY), a cult following isn’t necessarily guaranteed protection, especially if one cult replaces another.
The article 3 Companies With Cult Followings originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
