An Investor's Guide to 10 Super Bowl XLVI Commercials

An Investor’s Guide to 10 Super Bowl XLVI Commercials

If you caught the big game yesterday, you probably spent a significant chunk of time watching Super Bowl commercials, which are known for their huge budgets, celebrity cameos and screwball humor. Whether or not you were a fan of this year’s commercials, if they worked as planned, the featured brands are now a bit more ingrained in your memory–as well as in the minds of tens of millions of viewers.

It’s no surprise that we saw many industry leaders in the line-up. Clearly, these companies had enough money in the bank to shell out the average $3.5 million price tag for 30 seconds of air time. But, does this make them a good investment? I must admit that I’m curious about some of these big players, so today I’m going to take a moment and evaluate some of the biggest companies showcased at the 2012 Super Bowl.

To start, automakers overwhelmed the commercial lineup this year. This is understandable, considering that U.S. auto sales are on the rise again and automakers are eager to capitalize on increased demand.

Bumper Crop of Auto Ads

First up, General Motors Company’s (GM) Chevrolet had a number of creative commercials, each demonstrating a Chevy’s ability to outlast outlandish situations like skydiving, bungee jumping and even the apocalypse. Watch all three spots here.

But, in reviewing GM stock, it’s obvious that the company’s fundamental health doesn’t “Run Deep.” Of the eight fundamental factors that I look at, General Motors has decent operating margin growth, cash flow and return on equity. On the other hand, the company needs to improve both its sales growth and its earnings growth, so overall, this is a financially mediocre company.

But the real impetus for me is that buying pressure for GM is rock bottom. This stock has made some gains in the past quarter, but I’m not convinced that its financial troubles are over yet. In the past three months, analysts have more than halved their earnings estimates for the fourth quarter. So, I consider this stock a “sell”; keep this one on the sidelines for now. Click here to view my stock analysis for GM.

Toyota Motor Corp. (TM) had another ad that grabbed viewers’ attention–I especially liked the prospect of a new and improved Department of Motor vehicles.

However, although Toyota can claim that they have a reinvented Camry, the company should spend some time working on its financials. This company earns D- and F-ratings for every single one of the fundamental variables I tested for it. And, investors have caught on to its fundamental weakness; buying pressure for this stock remains quite low. Last summer, I rated this stock a “hold”, but the fall and winter has knocked the wind out of Toyota’s sales. So, I also consider TM a “sell”; do not get behind the wheel of this stock.

The Refreshing Taste of…

In addition to car commercials, we also had a number of veterans return to the commercial lineup, most notably a number of big beverage makers. Let’s take a look:

Soda giant Coca-Cola Company (KO) made another Super Bowl appearance with its classic Polar Bears. Although there were debates about whether the bears were as cute as years past, the ads were pretty much what audiences have come to expect from the animated bears.

And, the nice thing about Coca-Cola is that its fundamentals are also pretty solid. The company could stand to improve its earnings growth and momentum, but enjoys decent sales growth, cash flow and return on equity. And, thanks to its hefty 2.8% dividend yield, investors have been loyal to this stock. So, buying pressure has remained strong for this stock; it has been a solid A- or B-rated stock for over a year now. I consider KO a buy. My Portfolio Grader app includes the details on my recommendation.

Of course, wherever there is Coca-Cola, there is its main rival, PepsiCo Inc. (PEP). This year, Pepsi went with a dramatically different marketing approach, with an over-the-top spectacle that befitted the commercial’s kingly star Elton John. This commercial definitely highlighted PepsiCo’s appeal to a younger crowd.

But in reviewing the numbers, Pepsi Co’s financials seem a bit lukewarm. The company’s return on equity and earnings momentum is decent, but otherwise the company has run-of-the-mill earnings and sales growth as well as abysmal operating margin growth. The one notable thing about this stock is that it also has forgiving investors; buying pressure for this stock has improved in recent months. This stock is on the cusp of being a hold, but buying pressure is pushing it into “buy” territory. If you own this stock, I suggest that you keep a close eye on its levels of buying pressure, and watch out for a potential downgrade. Every week I update the data in the Portfolio Grader system, so be sure to check the PEP stock report card on a regular basis.

The Rest of the Field

If you’re curious about some of the other Super Bowl players, here are my grades for six more companies shelling out for a 30-second spot in the spotlight:

Company Name

Ticker

Fundamental
Grade

Quantitative
Grade

Total
Grade

Super Bowl
Commercial

Anheuser-Busch InBev

BUD

B

B

B

Watch it here.

Skechers USA Inc.

SKX

F

F

F

Watch it here.

E TRADE

ETFC

F

C

D

Watch it here.

General Electric Co.

GE

C

D

D

Watch it here.

Best Buy Co. Inc.

BBY

C

F

F

Watch it here.

Time Warner Cable Inc.

TWV

B

B

B

Watch it here.

So, while I’m happy to give the creative geniuses behind these commercials credit for their creativity, you’d be wise to watch them for entertainment only. Any stock ideas are best left to our fundamental and quantitative screens.

This week is another big one for earnings announcements, so I’ll be back tomorrow with a full update on market winners and losers.

Until then,

Louis Navellier

Louis Navellier

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