Geaux Tigers/ Roll Tide: Four Stocks For The BCS Title Game
It's finally here. The Bowl Championship Series title game pitting the LSU Tigers against the Alabama Crimson Tide. The game is a rematch of regular season match-up that CBS (NYSE: CBS) billed as the "Game Of The Century."
CBS probably had to hype up the game in such ostentatious fashion because Southeastern Conference Football is a revenue driver for the company. The result was a pitchers' duel in a football game as LSU won on Alabama's home field, 9-6.
Believe it or not, the odds makers have the over/under for the BCS title game set at 40. Take the under and take a look at four stocks that are plays on the final game of the 2011 college football season.
Allstate (NYSE: ALL) Are you in good hands? Seriously, Dennis Haysbert, the company's spokesman wants to know. Actually, if you invested in Allstate a year ago, you'd be out almost 10%. Bought all the stock five years ago and you'd be down almost 57%. It has been estimated that companies pay up to $15 million to be the primary sponsor for BCS games, so along with the Sugar Bowl, Allstate may have shelled out $30 million on sponsorship deals for two of college football's marquee events.
That's a fair amount of change, but it's also fair to assume Allstate at least thinks it's getting value on this deal. With a yield of 3%, Allstate could be worth a look above resistance at $29.
BP (NYSE: BP) Europe's second-largest oil company doesn't actually sponsor the BCS title game, but as we previously mentioned BP is doing whatever it can to improve its image along the Gulf Coast. If you're in New Orleans for the game and enjoyed the Gulf Coast Seafood & Tourism Bash, thank BP. The British oil giant sponsored that event.
BP isn't too far below its 52-week high and its 3.8% yield is inviting. Still, it would be nice to see the company sell more assets to raise cash to bolster the dividend and/or spin off its refining business.
Walt Disney (NYSE: DIS) The Dow component's ESPN unit, one of the company's most profitable businesses, airs the LSU/Alabama showdown tonight. There's plenty of emphasis placed on higher-priced Dow fare such as Caterpillar (NYSE: CAT), Chevron (NYSE: CVX) and McDonald's (NYSE: MCD), but Mickey Mouse has started the new year with a bang. The stock is up over 6% in 2012, recently cleared critical resistance and looks poised to challenge its 52-week high.
Dr. Pepper Snapple (NYSE: DPS) While rivals Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) have their prints all over several professional sports, Dr. Pepper Snapple has a nice niche for itself in the college football world. The company has sponsorship gigs all over the college football landscape and sponsored the BCS title game trophy last year.
In the past year, Dr. Pepper has outperformed Pepsi, but lagged Coke. However, DPS does offer a better yield than either of those two companies.
Traders who believe that the BCS title game is a real investment theme, might want to consider the following trades:
- Long Allstate. Maybe the company will raise its dividend this year.
- Long Disney. Mickey's chart is gorgeous here.
- Long Dr. Pepper for a defensive play.
Traders who believe these aren't the best stocks in their sectors may consider alternative positions:
- Ditch BP and go long Total (NYSE: TOT).
- Short the SPDR S&P Insurance ETF (NYSE: KIE).
- Pass on Dr. Pepper in favor of Coke or Pepsi.
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