For once, the biggest news out of Europe doesn’t have anything to do with the public debt drama—all eyes are instead focused on the 2012 London Olympic Games. For a few weeks, billions of viewers around the world will be focused on who gets the gold, and this should be a welcome distraction from the latest rumblings from Spain or Greece.
Already, we’re seeing a record turnout for the Games: In the U.S., NBC reported record ratings for its airing of the Olympics, and the BBC broke a record for its viewership during Saturday night’s swimming finals. This is fantastic news for the dozen or so official Olympic Partners, whose logos and slogans are splashed across the playing arenas and whose commercials are aired during the prime events.
So in today’s blog I’d like to take a moment to run down the biggest corporate names in the London Olympics and break down whether any of these companies are set to win big.
McDonald’s Corp. (MCD) is the world’s No. 1 fast food company by sales and operates more than 32,400 restaurants serving burgers and fries in more than 100 countries. There are nearly 14,000 McDonald’s in the U.S., but the company’s massive international operations remain the key to steady sales growth.
Everyone knows the McDonald’s name and the golden arches. It’s a global business with tens of thousands of locations. The burger chain has been a staple of the American culture for seven decades. This is a company that has shifted with the times, but not radically changed its core menu or signature marketing symbols. You may be able to get oatmeal or a fancy coffee in the morning now, but burgers are still at the company’s core.
While other fast food establishments may market themselves as the "King," everyone really knows that Ronald McDonald is the true brand leader of this industry. With a strong global presence, solid buying pressure and a bright future, you should feel confident picking up shares in this company and holding them for the long haul. MCD is a B-rated buy.
Coca-Cola Company (KO) is the undisputed king of soft drinks. In its 125-year history, the company has created 3,500 kinds of beverages, including Dasani, Fanta, Minute Maid and Nestea. The company has about 140,000 employees that serve 200 countries worldwide. In keeping with a tradition since 1928, Coca-Cola is an official sponsor of the London 2012 Olympic Games. With billions of viewers tuning in to the Olympics, the Coca-Cola brand should get some great exposure.
This company is also headed towards its first stock split in nearly two decades. While this split has been in the works since April, this week, shareholders voted to approve to increase the number of KO shares from 5.6 billion to 11.2 billion. On August 10, this split will go into effect, and liquidity should increase as more investors pour into the stock following the split.
This, coupled with a 2.5% dividend yield—the third highest among all Soft Drinks companies—makes KO a good near-term buy. KO is a B-rated buy.
For the past 125 years, General Electric (GE) has been a company that has exemplified American ingenuity. Throughout the years, this company has been responsible for inventing the fluorescent lamp, the dishwasher, the toaster oven, the MRI and the first U.S. jet engine.
However, even though General Electric is best known for its consumer electronics and appliances as well as industrial machinery, the company also has businesses branching into media, healthcare, transportation and finance. Operating in over 100 countries, the company currently employs over 300,000 people worldwide and is the 17th largest business in the world in terms of sales.
While GE could stand to firm up its fundamentals, especially in terms of sales and earnings growth, buying pressure for this stock has firmed up significantly over the past six months. GE is currently a B-rated buy.
With operations in over 200 companies and the capability to handle over 24,000 transactions per second, Visa Inc. (V) is a crucial player in the global credit card market. What’s interesting about Visa is that the company does not issue card itself, extend credit or set rates and fees. Instead, the company uses its advanced processing network to connect consumers, businesses, banks and governments. The company basically promoted access to electronic payments.
This stock has improved significantly in the past 12 months; this time last year, this was a D-rated stock. Most notably, Visa Inc. has firmed up its fundamentals—the company earns B-ratings all down the line, including sales growth, operating margin growth and earnings growth. The only two fundamental metrics that Visa needs to improve are its earnings momentum and earnings surprises. Meanwhile, buying pressure for this stock remains high.
Overall, Visa Inc. is an A-rated stock, but as with any financial stock, I’d keep a careful eye on this company’s balance sheet.
The Dow Chemical Company (DOW) sells chemicals, plastics and other specialized products and services worldwide. With roots going back to 1897, this company holds the distinction of being the third-largest chemical manufacturer in the world. Interestingly enough, the company is considered the “chemical companies’ chemical company” as most of its sales are to other manufacturers rather than end-users.
Last Thursday, the company announced a 10% year-over-year drop in sales thanks to weakness from Europe, the Middle East and Africa. In fact, just about every single one of the company’s business segments posted lower sales: Electronic and Functional Materials fell 4% while Coatings and Infrastructure Solutions dropped 6%. On top of this, management is not optimistic that the company will bounce back from this, so I suggest you stay away from DOW until the company’s balance sheet turns around. DOW is a D-rated stock.
This week, the earnings announcements will continue to come fast, so be sure to check in tomorrow for any market moving news!