3 Top Big Brand Stocks to Buy Now

When it comes to stocks, bigger is not always better.

Sometimes name recognition works against a company, in that some investors happily buy shares in companies they've heard of. That's the stock market equivalent of when novice horse racing fans bet aggressively on a contender based solely on the horse's name. You don't want your investment thesis to be the equivalent of someone placing $2 to win on a horse named "Can't Possibly Lose."

It's not that the horse is a bad horse or that a share of a popular company always means you shouldn't buy it. Instead, when making either choice, you want to ignore the name and look at the fundamentals. Whether you're asking "Does this horse have what it takes to win the race?" or "Does this company have what it needs for long-term success?" -- that's what you need to examine.

The three companies here are all big brands -- names you most certainly know. They're also companies with the building blocks in place to move even higher. While they aren't bargains, they're long-term buy-and-hold stocks that are poised for steady, strong growth.

Amazon's Alexa-enabled Echo and Dot are creating a new business for the company. Image source: Amazon.com.

Amazon has become something more

There was a time Amazon.com (NASDAQ: AMZN) was mostly an online bookstore. It then became a marketplace that eventually started selling pretty much everything, and then it became that plus a company that dabbled in devices. Now, with the success of the company's cloud business and its rapidly growing Echo/Alexa platform, the online retailer has become a three-headed monster.

At the end of Q3, the company had seen its year-to-date product sales grow by over $10 billion, from $52.65 billion in the first nine months of 2015 to $64.03 billion during that period in 2016. In addition, the company has increased its service revenue -- mostly its Amazon Web Services cloud business -- from $18.6 billion over three quarters in 2015 to $28.2 billion through nine months of 2016, another nearly $10 billion improvement.

The company doesn't break down numbers for its device sales, but the Echo, powered by the company's Alexa artificial intelligence, has been a breakout hit that has essentially created a new category forcing nearly all the major tech players to launch rival products. CEO Jeff Bezos didn't go into exact numbers, but he did share some info on Echo/Alexa's success in the Q3 earnings release.

Bezos might be using humor to illustrate a point, but Alexa goes beyond just selling devices for the company. It's an entry into home automation and a synergistic opportunity for Amazon to sell more products, music subscriptions, and anything else as it becomes embedded in consumers' kitchens and living rooms.

Starbucks has a new way to grow revenue

Starbucks (NASDAQ: SBUX) shares dipped after the company reported its Q1 earnings. Investors reacted to same-store sales in the United States coming in below expectations. COO and incoming CEO Kevin Johnson talked about how that happened in part because Mobile Order & Pay created congestion at the front of stores, where people wait to pick up their order, causing some people to walk away without ordering anything.

The Starbucks Roastery in Seattle may be the model for a new business. Image source: Starbucks.

That particular problem is a logistical blip the company can easily solve in coming quarters. It's more important that Starbucks has trained its customers to use the digital system that takes people out of line, allowing for more workers behind the limited counter space to focus on drink production rather than order-taking. In the long run -- once the logistics get solved -- that lets stores serve more customers, increasing sales potential.

In addition to having technology that should help the company grow over the long term, Starbucks also had some strong results that show it can succeed with its premium Roastery/Reserve brand. Sales at the Starbucks Roastery in Seattle grew by 24% in 2016 over the previous year and were up another 18% in Q1 2017. CEO Howard Schultz attributed that to an average ticket that comes in at four times what a typical customer spends in a regular store.

The company plans to expand on that opportunity by opening Roasteries in Shanghai in 2017, followed by New York in 2018, Tokyo that same year, and a not-yet-picked European city after that. The chain also plans to open 1,000 or more premium Reserve stores around the world and add Reserve bars to a not-yet-determined number of stores. These new formats, along with Starbucks' ability to leverage technology to make its stores more efficient, should lead to increased growth opportunities.

Netflix has room to grow globally

While Starbucks and Amazon's growth potential takes some explaining, Netflix's (NASDAQ: NFLX) doesn't. The company has shown staggering growth over the past year, adding 7.05 million global subscribers in Q4, following over 12 million added in the previous three quarters. Only 4.69 million of those came from the U.S., which, with 49.43 million of the company's 93.8 million total global membership, has become a mature market.

Netflix CEO Reed Hastings explained during the company's fourth-quarter earnings call that the streaming leader has become stronger as it has grown its library.

Netflix keeps adding to its lineup of original content. Image source: Netflix.

Chief Content Officer Ted Sarandos expanded on what Hastings said. He explained that as time goes on and new originals are added, the appeal of the product becomes stronger.

Because Netflix's biggest draw is its own content -- an asset it owns -- the company's appeal only gets stronger as time goes on. That means that not only will holdouts eventually have so much they want to watch they succumb and join, but existing members also won't be tempted to leave.

Find out why Amazon.com is one of the 10 best stocks to buy now

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Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com, Netflix, and Starbucks. The Motley Fool has a disclosure policy.