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World Cup Stocks
06/13/2014 9:00 am EST
No sporting event attracts as much attention across the globe as the World Cup; consider that 3.2 billion people watched at least a portion of the last World Cup and nearly a billion people watched the final, suggests Chris Preston in Daily Profit.
And when the world is watching, somebody is profiting. And some companies will profit greatly from the 2014 World Cup in Brazil. Here are four "World Cup stocks" that stand out:
Nike (NKE) derives $1.9 billion of its annual revenue from soccer. Nike is also sponsoring ten national teams, including the US side and host Brazil, in this year's World Cup.
While Nike's soccer footprint is large, it's still very much growing. The company didn't even enter the soccer space until the 1994 World Cup was held on US soil. Nike still has a ways to go before it overtakes Adidas as the Number One brand in soccer.
It's catching up fast, though. Nike had its best quarter of the year during the 2010 World Cup. With even more viewers expected this year and Nike getting some significant pre-tournament buzz about its "Winner Stays" commercial, expect another monster World Cup quarter from Nike.
McDonald's is an official sponsor for the World Cup, so its name (and commercials) will be everywhere in the coming month. Coca-Cola is not only an official sponsor, but has a history of seeing a boost in local sales during the World Cup. Coca-Cola's German sales jumped 15% during the 2006 World Cup in Germany.
Few companies have the global reach of these two behemoths. In an event that plays out in front of a worldwide audience, Coca-Cola and McDonald's are two of just a handful of companies that shelled out big bucks to have their logos appear in every stadium and on commercials airing nonstop. Only a handful of companies in the world can buy that kind of publicity.
Here in America, ABC and ESPN will air every game of the 2014 World Cup. And that will benefit those networks' parent company, The Walt Disney Co. (DIS).
Advertisers paid an average of $389,000 per 30-second TV spot during the 2010 World Cup, up from a mere $129,000 in 2006. That number should be even higher this year. And with ABC and ESPN airing 64 matches, all with countless commercials…well, that adds up over the course of a month.
Even for a company as large and diversified as Disney, those kinds of sales move the needle. Analysts are expecting second-quarter earnings per share of $1.16, 15% higher than a year earlier.
We caution that it is dangerous to invest in a company based on a single event. But companies that prove they can reach customers in an event as popular and globally visible as the World Cup are companies worthy of your attention.
There's a reason you know the names Nike, McDonald's, Coca-Cola, and Disney. They're all blue-chip companies and universally recognized brands. Anyone who watches soccer—and that's at least 3.2 billion of you—will get to know those familiar names even more in the coming month.
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