Take a Swing at These Sports Stocks
Bob is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With Major League Baseball in full swing and the NHL and the NBA in the midst of their respective finals, it might be a good time for you to consider stocks that make big money from sports. While sports and stocks might not seem like a match, avid sports fans have good reason to consider investing in these companies.
Sports in the United States represent big business, and the popularity of sports in America has led to big profits for some of the country’s biggest companies. If you’re an avid sports fan and an avid investor to boot, you’d be wise to consider these stocks the next time you watch your favorite team.
Profits are a slam dunk for these stocks
There’s no event that represents the pinnacle of sports greatness in America better than the Super Bowl. Speaking of which, CBS Corp. (NYSE: CBS) saw solid full-year 2012 results, including 3% growth in total sales, on the strength of its Entertainment and Cable Networks divisions, which include the company’s flagship CBS Network and the premium subscription service CBS Sports Network.
The good times continued for CBS in its fiscal first quarter. Revenues grew 6% year over year, and diluted earnings per share soared 24% from the prior year’s first quarter.
Football is America’s most popular sport, and CBS dominates football broadcasting. CBS broadcasts weekly NFL regular season games, as well as AFC regular-season, post-season divisional playoff and championship games. CBS Sports has rights to broadcast the AFC through the 2013 season, including the broadcast of the 2013 Super Bowl.
Two years ago, CBS wisely extended its rights with the NFL to broadcast the AFC from the 2014 season through the 2022 season, including certain National Football Conference regular season games and the Super Bowls in 2016, 2019, and 2022.
CBS is valued fairly generously, exchanging hands for 18 times trailing earnings. The stock offers shareholders a 1% dividend at recent prices.
Disney (NYSE: DIS) is a media conglomerate with a market capitalization of $115 billion and a wide array of sports networks, including ESPN and ABC. Disney reported solid 2012 results, with sales increasing 3% year over year on the strength of its Media Network segment, which saw sales increase by 4%.
Disney is off to a strong start to 2013 as well. Revenues and diluted earnings per share have increased 7% and 12%, respectively, over the first half of the year as opposed to the same period in 2012.
Disney is a highly profitable company and is one of the most universally known and most valuable brands in the world. However, it’s worth noting the stock trades for 20 times earnings and pays a dividend yield just north of 1%.
A retailer for the do-it-yourself sports enthusiast
For those investors who don’t just watch sports, but enjoy hitting the golf course, basketball court, or baseball diamond themselves, retailer Dick’s Sporting Goods (NYSE: DKS) might be a stock for you.
Dick’s Sporting Goods is a $6 billion retailer of sports apparel and equipment, as well as hunting accessories. Dick’s has been firing on all cylinders recently. The company saw consolidated earnings per diluted share jump 17% in 2012 versus the prior year. Furthermore, Dick’s announced its plan to repurchase $1 billion of its own shares over a five-year share buyback authorization. That will mean fewer shares outstanding, providing an assist to the company's earnings growth.
Dick’s also pays a dividend to shareholders, which yields nearly 1% at recent prices. The stock trades for 21 times trailing earnings.
The Foolish takeaway
Each of these companies profits handsomely from each of America’s beloved sports. Investors in these stocks should take comfort from the fact that America’s love affair with sports isn’t likely to end any time soon.
These stocks are reporting higher sales and profits, and should further benefit from the gradually improving housing and employment markets. Moreover, the American consumer is slowly feeling better about their financial picture, meaning there’s still opportunity for each of these companies to profit handsomely for many years to come.
It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. 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!