How to determine best of breed
When investing, as opposed to just picking undervalued companies (which I do), my favorite way to trade/invest (mostly because of how easy it is) is to find a sector I consider undervalued (or has enough momentum) and buy the best etf for that sector (based on chart performance) or (and i like this one more) buying the best company in its sector. For some its obvious...PM for tobacco, KO for soft drinks (I guess PEP is comparable too), MCD for fast food, NKE for sneakers, VFC (coh too, but that is more specific)for clothing, and STD for European banks.
But how do you find it for other fields? I have been told for example SLB is BoB for oil. I have been told this is because of:
1) Best brand- how is that determined in a field with no taste? Simply whoever has the least screw ups?
2) Best management- how is good management determined, other than a lack of scandals? Is this ROI, ROA, ROE? Or what?
3) Best market share- how do people know what % of the market a company has for its products? Where is this information available?
4) Anything else? How do you determine that a company is the best of its breed?
This is something I have thought about considerably and would love to know anything and everything. Thanks!