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Cramer seeks great brands of tomorrow

From Heinz ketchup to Lays potato chips, favorite brands wield power.

"They have equity which means that they can charge more than the other guy. And because they're so popular, they have moats around them," Jim Cramer said.

When a brand is very powerful, he said, it often commands a premium, and by proxy, its stock does, too. "Tesla is an example," Cramer said. "Netflix is another and so is Amazon."

Although branding is considered a marketing fundamental, Cramer thinks it's a valuable metric in finance because investing in popular brands, while they're still in early stages of growth, can generate big returns.




Jim Cramer on Mad Money.
Adam Jeffery | CNBC
Jim Cramer on Mad Money.

In his latest attempts to find the great brands of tomorrow, Cramer scoured the Internet, in part because it's a relatively young industry. Therefore, brands aren't just facing organic growth, they could grow through acquisition, too.

And, after examining the space, Cramer concluded that one of great brands of tomorrow may be HomeAway. "The company lists vacation homes you can rent for short periods of time, aggregating a very fractured market," Cramer said.

If HomeAway is strategic it could become as familiar in our daily vocabulary as Google. "And I think that would be the ideal next acquisition for Priceline as an alternative to Hotels.com."

Another great brand of tomorrow may be Yelp, a website that allows individuals to post reviews of restaurants, stores and more. Cramer considers Yelp a modern-day Yellow Pages and believes the site could become as popular as Yellow Pages were in their glory days.

Although shares trade at a sharp premium, if "Yelp stock were to go down, I think the company would be snapped up by someone looking to own the online authority in dining and hotels."

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Finally, Cramer can see Zillow becoming a big brand, too. As an online real estate database, Cramer thinks Zillow could be a strategic holding for any company that's looking to leverage a modern take on classified advertising, once a staple of newspaper profits.

"I know all of these companies are expensive," Cramer added, noting that they all probably want to go it alone. "But even if they remain independent, they're companies with great brands, and typically those are the kinds of companies that are rewarded with higher and higher stock prices."

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