A Touchdown for Your Portfolio: Investing in the Super Bowl
Lots of investors are convinced that they can take advantage of particular stocks at certain times of the year, believing that this is the one and only these stocks will outperform during the year. While I commend people for using their brain and seeing the logic between stock performance and specific events, I have to remind folks that this is not unique thinking among stock professionals. Getting ahead of the market means attempting to predict events in the future, and in this case it isn't anticipating the actual event or holiday, but looking to the earnings report for that particular quarter and judging by trends predicting if the company will come ahead of the same event/holiday a year earlier.
The Super Bowl is a MAJOR event that all investors look to in order to gauge what stocks to buy heading into the spring earnings season (which generally is reported in April). There are a few ways that an average investor can gain from the first major event of the year, but it all requires some unique thinking and not blindly following advice of the pros.
1. Surge in Food and Entertainment - When it comes to the Super Bowl, the two largest industries to benefit are chicken wings and beer, right? The obvious choices in this category would be Buffalo Wild Wings (BWLD) and Anheuser Busch Inbev (BUD), however blindly buying into these stocks now would be a mistake. Taking note of the company's sales during the Super Bowl in the past year or two is the first step, and the next is an educated guess on your part about whether or not they can keep up this pace?
2. Commercials! - A ton of people watch the Super Bowl for the football game, but just as many people watch the game for the commercials. In recent years, it has been more difficult for companies to really strike it hard with a bold, emotion-striking commercial. The most memorable ones either make you laugh or make you cry - these are the two main emotions that advertisers are attempting to strike. However, this does not necessarily mean that sales will double the next day; what it does is make the company memorable in the mind of the consumer, and judging by how memorable the commercial is, the greater the potential for the company to attract new clients and potentially pull ahead of the competition during earnings season.
3. Casino & Gaming Stocks - the stakes for both Super Bowl teams are pretty evenly matched this year, and as such this will result in a whole lot more sports betting, both at casinos and online gaming services. While the economy may still be shaky, consumers are still going to town on spending money and when the win potential is huge for the Super Bowl, why not? The emergence of new gaming sites like Draft Kings and FanDuel have massively mobilized this group, and if these two services are not available in the consumer's respective home state, you can "bet" they will be heading to their local casino.
P.S. these are my favorite Super Bowl commercials of all time...
enjoy the game and commercials all!