Some companies will spend millions on advertising during the tournament, hoping for a boost from exposure to a global audience.
Other companies will be rubbing their hands at the thought of a boost to their business regardless of any advertising spend.
Graham Spooner, investment research analyst at The Share Centre, picks five stocks that look likely to see their share price get a boost from the upcoming 2014 FIFA World Cup. ITV
“ITV is amongst several broadcasting companies televising World Cup games this summer,” Spooner said.
“Showing 34 games across two channels, the group has accumulated a knowledgeable and respected team of pundits and commentators.”
“Additional benefits could come from advertising with one company reporting that the group could potentially charge a £300,000 premium for advertising rights for a period of just thirty seconds during England’s matches.”
“Investors should be encouraged that ITV has taken appropriate actions to make the most of the tournament by showcasing global talent as well as national matches, the group have the potential to benefit.”
ITV has been one of the fastest-growing stocks in the UK in recent years, making it a firm favourite with equity funds.
Our data shows it is up 170.46 per cent over three years as the FTSE All Share has risen just 30.13 per cent.
Performance of stock vs index over 3yrs
Source: FE Analytics
The stock was recently tipped by Artemis’ Simon Edelsten, who also says that it should do well off the back of the World Cup.
The company is currently considering buying a suite of gyms from LA Fitness. The stock is trading on a price to earnings [P/E] ratio of 14 times.
Sports Direct
“As a replica shirt retailer, Sports Direct should see an increase in sales over the tournament period,” Spooner said.
“The retail group’s online operations offer a vast array of products at reasonable prices and will therefore be easily accessed by supporters across the country.”
“Investors should be aware that as well as the official merchandise being a potential good seller, general footballing goods sales may also receive a boost - particularly if England progress further than the group stages.”
Sports Direct is another stock to have seen high growth in recent years: it is up 234.25 per cent over three, in which time it has been elevated to the FTSE 100.
However, like ITV it has sold off in the recent market wobble that has largely affected growth stocks, with many analysts suggesting investors have been selling their winners.
Performance of stocks and index in 2014
Source: FE Analytics
The stock is still on pricy valuations with a P/E of 24 times earnings.
Domino’s Pizza
Spooner also thinks Domino’s Pizza could benefit judging by its record in past major tournaments.
“The late nature of the kick offs of this year’s tournament will mean that more people could choose to stay home and enjoy the games,” Spooner said.
“Takeaway pizza chain Dominos has previously done well during large sporting events and investors should acknowledge that.”
“Immediately following South Africa’s Word Cup, the company reported a 13.7 per cent rise in like for like sales in the six months covering the period when the tournament was played.”
“We expect to see promotions connected to the event so this World Cup could see similar results.”
Performance of stock vs index over 3yrs
Source: FE Analytics
The shares are down 126.12 per cent since their highs in June of last year, according to FE data, but the stock is still trading on a valuation of 20 times.
William Hill
“With our national team at around 33-1 to win, a number of supporters are inevitably going to be tempted to have a flutter,” he said.
“During the last World Cup, £1bn was gambled by British punters alone and with consumer spending on the rise, this number could increase.”
“The global appeal of events William Hill covers means they are involved with most major sporting events and investors should acknowledge that the tournament taking place in Brazil this summer could benefit the group.”
William Hill shares are up 70.26 per cent over three years, but have suffered since last summer.
Performance of stock vs index over 3yrs
Source: FE Analytics
The company was hit by a tax increase on high stakes gambling in this year’ budget and has had to close 109 shops and sack 420 staff. It is trading on a P/E of just 11 times, though.
Marston’s
If not eating a pizza in front of the TV at home with a betting slip in hand football fans are likely to be in the pub, says Spooner, which will benefit Marston’s.
“The company operates 2,150 pubs in the UK and will aim to gain more capital by enticing football fans to visit their establishments over the event period,” he said.
“Opening hours are set to be extended in some venues so the group could look to benefit from longer periods.”
“Investors will be reassured that Marston’s started the year well and could be a beneficiary of a sporting event that is of much national interest.”
Performance of stock versus index in 2014
Source: FE Analytics
The stock is up 2.44 per cent this year ahead of the index’ 2.14 per cent. It is another to have come off since last summer though, and is more or less flat over 12 months.
The stock is trading on a P/E of 12 times.
