Piggybacking Off the NFL All the Way to the Piggy Bank
Jake is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If there’s any doubt that football is the most popular sport in America, just look at the numbers. Nearly every week, an NFL game leads all other shows in ratings on network TV, and Monday Night Football leads the pack on cable. Contracts with FOX, NBC, and CBS give the league over $3 billion a year in revenue, more than the NBA and MLB combined. Even the fantasy version generates nearly $1 billion in annual revenue, which helps fuel the sport’s popularity because fantasy players have a stake in nearly every game.
So as an investor, it makes sense to capitalize on the NFL’s success by picking stocks that can grow alongside the league. Below are three football-related stocks that won’t necessarily make you rich, but are safe, solid picks that should be a part of your portfolio.
Growth in Apparel
It might be hard to imagine a company as ubiquitous as Nike (NYSE: NKE) with much room for growth, but the apparel giant’s deal with the NFL should help the company’s continued expansion for years to come. This past April, Nike started a 5-year deal as the NFL’s exclusive on-field apparel company, and so far the results have been strong. For example, the Seattle Seahawks have seen a reported 274% uptick in merchandise sales since Nike took over, and on Sunday, Seattle will debut a new alternative uniform by Nike. Plus, with a slew of young stars like Robert Griffin III and Andrew Luck, jersey sales should continue to soar.
On Friday, Nike’s home state of Oregon passed emergency legislation to ensure that the company’s favorable tax deal would stay in place. In return, Nike plans to add at least 500 jobs and invest over $150 million dollars. The expected expansion and security of the tax deal should give investors added confidence. Plus, analysts expect earnings to grow a respectable average of 12.38% over the next five years, and they give Nike an average rating of “Buy” on the Nasdaq’s website.
This Media Behemoth Has Legs
In addition to being the nation’s largest cable operator, Comcast (NASDAQ: CMCSA) is also one of the largest media empires, after becoming the majority owner of NBCUniversal three years ago. And for the first time in the last ten years, NBC leads the network pack in ratings, thanks in part to the ratings boosts from the NFL. NBC’s Sunday Night Football usually dominates the field, and even the network’s pregame show “Football Night in America” tends to rank near the top. Granted, NBC will have to fill the void soon when the regular season ends and the hugely popular show “The Voice” goes on hiatus. But overall, NBC’s ratings growth is one of the several signs that Comcast is headed in the right direction, especially as the company looks to acquire more of the network over the next five years.
As technology changes the way we watch TV (e.g. on-demand, via smartphones, etc.) the company seems to be on the right path for the future, instead of resisting the change. For example, Comcast has rolled out new ventures like Xfinity Streampix, a Netflix-competitor released earlier this year. And a few days ago, the company expanded its Xfinity TV Player app by allowing users to download shows and movies to watch offline.
As the company has grown, the stock price rose over 50% this past year. Still, Comcast has a favorable P/E ratio of under 17, indicating that the stock has room to continue going up.
Don't Forget the Beer
With the rise of craft breweries, the world's largest beer company may not seem like the best investment. But thanks to the NFL, Anheuser-Busch Inbev (NYSE: BUD) (owners of Budweiser) could be a smart short-term pick.
Since Bud Light is the official beer sponsor of the NFL, the company will be in full advertising mode in the coming weeks when the playoffs begin. And as the exclusive beer advertiser during the Super Bowl, AB Inbev will generate significant publicity as Super Bowl ads tend to be highly talked about afterwards. But even if the ads don't go viral, the stock should still see a boost. A team of researchers from the University of Wisconsin-Eau Claire found that companies who advertise during the Super Bowl tend to outperform the S&P 500 during the week before and after the big event.
By this logic, several other companies that advertise heavily during the Super Bowl such as PepsiCo and General Motors could also see an uptick in sales, but when looking at the larger picture, AB Inbev seems like the smarter choice. Compared to these other companies, AB Inbev has a higher expected EPS and sales growth. Also, analysts agree that it's still a "Buy" based on the merits of its financials, rather than being entirely dependent on a Super Bowl bump.
If only the Green Bay Packers (the NFL’s sole publicly-owned team) traded on a stock exchange, it would be a lot easier to profit off the NFL’s stratospheric success. But as these companies indicate, having a relationship with the NFL can generate substantial growth, so consider adding these and other football-related stocks to your portfolio.
JakeSafane has no positions in the stocks mentioned above. The Motley Fool owns shares of Nike. Motley Fool newsletter services recommend Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!