We are now in Week 2 of the 2012 NFL season and already we’ve had a number of nail-biting games, with a few blowout victories and some near misses. But rather than giving a play-by-play of the latest games, I want to spend some time looking at football from a slightly different angle—finding the best investing opportunities tied to the NFL.
After all, football is America’s most profitable sport—the National Football League took in some $10 billion during the 2011 regular season—and the NFL also supports over 110,000 jobs nationwide, more than the 96,000 jobs created in August! I’ll kick things off by analyzing three Official NFL Sponsors that have become fixtures in many American households on Game Day.
Official Beer of the NFL
First up is Anheuser-Busch InBev SA/NV (BUD), the world’s largest brewer. With household names like Budweiser, Corona, Stella Artois and Skol under its belt, AB Inbv commands nearly a quarter of the global beer market. For several years, Bud Light has been the official beer of the NFL, and according to market research, nearly half of all avid football fans readily recognize it as the official sponsor.
If you plug BUD into my portfolio grader tool, you’ll see that Anheuser-Busch has a lot going for it in terms of fundamentals—of the eight metrics that I graded this stock on, seven were A- or B-rated. The only room for improvement is sales growth—in the last quarter the company’s top line declined 1% compared with the last year. Otherwise, the company’s fundamentals are quite strong—as is buying pressure for this stock. Combine this with the second-highest dividend yield in the Brewers Industry (1.5%), and you have a recipe for an A-rated buy.
Official Pizza of the NFL
If you keep up with my Stock of the Day app, you may already know this, but the official pizza sponsor is Papa John’s International Inc. (PZZA). With nearly three decades in the business, Papa John’s official motto is “Better Ingredients. Better Pizza,” and this motto has helped propel the company to the forefront of America’s pizza delivery obsession, a $35 billion industry. The company recently unveiled a season-wide promotional giveaway of two million large one-topping pizzas to members of its Papa Rewards online customer loyalty program, double the number of pizzas the restaurant chain gave away last season.
And it turns out that better ingredients also make for a better stock, as PZZA is an A-rated buy in my system. I like the stock for its solid fundamentals consistent earnings growth and momentum, as well as operating margin growth, and excellent return on equity (A). In terms of buying pressure, I also give PZZA an A, topping out this global pizzeria as another A-rated buy.
Official Soft Drink of the NFL
While nearly a quarter of fans assume The Coca-Cola Company (KO) to be the official NFL soft drink, competitor PepsiCo Inc. (PEP) is actually the official sponsor in this category. Despite the company’s best efforts to promote the brand by presenting the NFL Rookie of the Year awards, NFL brand recognition dipped in 2012 compared with last year. That’s probably because recently Pepsi ceded the No. 2 soda title to Diet Coke.
And PepsiCo’s struggles with Coke show in its portfolio grader stock report. Currently, the stock is B-rated, but that’s only due to its strong buying pressure. If you look a little closer, you’ll see that PEP is struggling in terms of fundamentals. In fact, of the eight fundamental metrics, seven are C- or D-rated; only return on equity receives a passing grade. So while this Conservative stock is technically a B-rated buy, I would proceed with caution because even a slight change in buying pressure could send PEP down into hold territory.
To all you Broncos and Falcons fans, I hope you enjoy tonight’s match. To everyone else, stay tuned to the blog this week as I’ll have important updates on housing, manufacturing and the latest buzz on Wall Street.