5 Stocks To Consider During The 2014 World Cup
The opening games of the 2014 FIFA World Cup have been filled with excitement and one major upset as the Netherlands defeated Spain by a margin of 5-1 on June 13.
The event, which generates worldwide buzz every four years, has already juiced Brazil's stock market as investors attempt to play a bounce in the host country's economy.
In fact, the Brazilian Bovespa had risen 23 percent since the beginning of March heading into the kickoff of the World Cup. According to historical data, the gains may be justified.
The accountancy and finance recruiting firm Marks Sattin estimated that the World Cup will lift Brazil's economy by 4.1 percent over the next two years, largely on the back of an influx of tourism dollars.
A win for the Brazilian National Team could be icing on the cake for investors, as analysts from Goldman Sachs have calculated that the winning country's stock market tends to outperform the global average by around 3.5 percent in the month following the victory.
Not surprisingly, a host of multinational companies are also betting big on the World Cup, either through sponsorships, television rights, or an expected boost in sales.
Below is a look at five stocks that may benefit from the world's biggest soccer tournament:
Disney (NYSE: DIS)
This blue-chip company is a major stakeholder in the World Cup by way of its ownership of ESPN, which paid $100 million for the broadcasting rights to the 2010 and 2014 tournaments. In hindsight, this looks like a very savvy deal as the popularity of soccer is on the rise in the United States.
Viewership rose by 22 percent between the 2006 and 2010 World Cups and the American men's team will be looking to keep the buzz going in 2014. Furthermore, Fox has paid a whopping $425 million for the World Cup broadcasting rights in 2018 and 2022. Comparatively, Disney's $100 million investment looks like a steal. The stock has been on a hot streak heading into the 2014 tournament in Brazil, with the shares jumping better than 18 percent over the last six months.
On a longer-term horizon, Disney's performance has been even more impressive, with the stock more than doubling since the beginning of 2012.
Nike (NYSE: NKE)
The leader in global sports apparel is another blue-chip company that has a significant stake in this year's World Cup. Although rival Adidas is an official sponsor of the tournament, Bloomberg reports that the Nike logo will be on the most team jerseys at the World Cup. The company is sponsoring a record ten national teams, which is one more than Adidas.
The World Cup is a massive marketing opportunity for Nike due to its global scale. Besides the Olympics, no other event so effortlessly crosses national and cultural boundaries. Of course, the company fully understands this opportunity and has been running a series of ads promoting its roster of Nike-sponsored soccer superstars, including Christiano Ronaldo and Wayne Rooney.
Last year, the company totalled nearly $2 billion in soccer-related sales. That number is expected to approach $2.8 billion in 2014 as a result of the attention generated by the World Cup.
Anheuser-Busch InBev (NYSE: BUD)
Although the Anheuser-Busch name may be as American as apple pie, the company was transformed into a global powerhouse in the brewing industry when it merged with InBev in 2008. The combined company controls roughly 69 percent of the Brazilian beer market and produces the Brahma, Antartica, Bohemia and Skol brands.
It is a fairly safe bet that beer sales will spike during the World Cup in this soccer-crazed country, and this means higher sales for Anheuser-Busch InBev. Furthermore, the Budweiser brand of beer has been the “official beer” of every World Cup since 1986 and the company has inked a deal to keep this tradition alive through 2022. It also has opened the “Budweiser Hotel” on Rio de Janeiro's Copacabana beach as a destination for soccer fans.
Any way that you measure it, few companies have as much at stake in this year's World Cup as the brewing giant. As the tournament gets under way, the stock is currently sitting at a new all-time high after tacking on a little less than five percent in 2014.
Coca-Cola (NYSE: KO)
The soda giant is an official partner of FIFA for the 2014 World Cup, at a reported cost of between $25-50 million per year, and its logo should be front and center throughout the tournament.
Coca-Cola may be the best marketer on the planet, and the World Cup is a top-notch venue for reaching a global audience. In addition to spiking beer sales, common sense would dictate that soda sales will also rise during the tournament. If you aren't enjoying the action on the pitch with an ice cold adult beverage, a Coca-Cola is the next best thing.
The shares have been doing well in the run-up to the World Cup, rising better than 6.50 percent over the last three months. Year-to-date, however, the stock is down a little less than two percent.
iShares MSCI Brazil Index ETF (NYSE: EWZ)
For investors that want to play a “World Cup bounce” in share prices, but aren't sure what stock to buy, the easiest way to get in on the action is to buy the EWZ, which tracks the Brazilian market as a whole.
This ETF provides investors with exposure to huge Brazilian resource companies such as miner Vale (NYSE: VALE) and oil giant Petrobras (NYSE: PBR), among others. Although Brazilian stocks have already made a big move, it may not be too late to make some money off of the worldwide soccer frenzy.
The Brazilian National Team is among the favorites to take home the title, and as noted previously, a World Cup victory normally provides a near-term boost to the winning country's stock market.
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