Stock Super Buys for the Big Game
Matt is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The NFL is really weird about other people using the words “Super” and “Bowl.” Notice that advertisements usually call Sunday’s titanic matchup between the Ravens and the 49ers as the “the Big Game.”
That’s because those NFL folks know more than just 3-4 defenses and spread offenses--they know about branding. So do the companies that are going to advertise or have product placements during the Super... errr.. the Big Game.
Under Armour’s Thick Financial Skin
If there’s a Cinderella story in the athletic apparel industry, it’s Under Armour (NYSE: UA). The founder, Kevin Planck -- a special teams player on the University of Maryland football team -- started the business in his grandmother’s basement. Nowadays you’ll see just about every player in every major sport decked out in Under Armour gear. When you look on the sidelines this Sunday, expect to see more than a few players wearing the material that’s designed to wick sweat away, rather than soak it up. Now the company produced more than sweat-less shirts, making everything from hats to socks.
Under Armour's stock has also been a success story. In the past five years, the stock has soared about 176 percent. The last 52 weeks, its tracked up more than 30 percent. The revenue also looks good for an investor seeking dependable returns. Revenue has gone up steadily each year from from $725 million in 2008 to about $1.4 billion in 2011. Earnings Per Share (EPS) has also grown in nice chunks. In 2008, the EPS was $0.38, and the latest figures, $0.92 EPS, show that the company is closing in on nearly a dollar a share EPS.
I’m trying desperately to find a competitor that matches UA, but unless you’re willing to trade Japanese and Chinese stocks, it’s pretty difficult to find a company that matches this company’s past performance and future potential.
Investing in the Pepsi Generation
I can’t imagine what a football game would be like without a Pepsi (NYSE: PEP) commercial. The company usually has the most talked-about commercial during the Super Bowl. There are few companies that can duke it out with Coca-Cola (NYSE: KO) in the marketing and branding department, but Pepsi is one of them.
The company has begun to shake off the free fall from the recession and is nearing an all-time high trading range. Revenue and earnings are trending upward over the past few years. The company’s EPS has gone from $3.46 in 2008 to $4.40 in 2011. Revenue has grown from 43.2 billion to $66.5 billion during the same time period.
Pepsi’s major competition, Coca-Cola, has seen revenue rise from $31 billion to $46 billion between 2008 and 2011. The EPS for Coke has gone from $1.30 to $1.87. Both Pepsi and Coke have P/E’s in the 19 range.
Beer Commercials, Football, and Horses
Most Americans will be gathered around the television not to see a game-winning field goal, but to watch a herd of Clydesdales boot a football, or do something else dreamed up in the fertile minds of the ad agency responsible for Anheuser-Busch (NYSE: BUD) marketing.
Anheuser-Busch, by the way, is now an international conglomerate, called Anheuser Busch Inbev SA, that sells about 200 different types of beer. Those brands of beer are some of the most valuable types of brewskies in the world, and that’s the main reason for it’s smooth flow of revenue and earnings. In 2008, the company was producing about $23.5 billion in revenue. That figure jumped to $36.7 billion a year later. It took a slight dip in 2010, but the latest figures (2011) show the company has regained revenue strength, posting over $39 billion in revenue.
EPS rates are also nice and frothy. The EPS rate has climbed from $2.47 a share in 2008 to $4.24 in 2011. With a P/E of 20, the stock does not look too expensive at its current valuation in the $90 range.
Now go back and enjoy the commercials...I mean the big game.
mlswayne has a position in Under Armour. The Motley Fool recommends Coca-Cola, PepsiCo, and Under Armour. The Motley Fool owns shares of PepsiCo and Under Armour. 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!