You are here: Home - Investing - Experienced Investor - News -

Stocks to benefit from super summer of sport

0
Written by: Adam Lewis
09/06/2016
Tomorrow night sees the kick off to the UEFA European Championship in France, which will see 24 nations battle it out over the course of the next four weeks to be crowned the football kings of Europe.

It is also the start of an incredible summer of sport, with armchair fans being treated to the Olympics in Rio and the Ryder Cup, alongside the annual favourites of Wimbledon and the Tour de France. So just as you are picking yourself up from the inevitable disappointment of penalty shootout heartache, you can turn your attention to rooting for Mo Farah in Brazil.

With such a carnival of sport on the horizon it is little wonder that commentators are gearing up to link your favourite games with the investment world. Here AJ Bell’s investment director Russ Mould and Hargreaves Lansdown’s senior analyst Laith Khalaf pick a number of shares which look set to benefit from the sporting bonanza.

At the outset Mould caveats that a solid investment case must be made for investing in these companies, as one-off events won’t compensate for a business that has poor fundamentals.

Nike

Khalaf says: “The American sporting giant is the England kit sponsor for the Euro 2016 tournament and will be working overtime to convince fans that no French trip is complete without three lions emblazoned on your chest. In a sign of just how much kit sponsorship can mean to a company – Nike recently netted the Chelsea kit sponsorship for a reported £60m a year.”

ITV

Mould says: “A recovery in advertising revenue, bolstered by its role as an official broadcaster of the European Championships, could help arrest a decline in ITV’s share price which has seen it lose nearly 25% of its value year-to-date. The shares now trade on an attractive looking 12.1 times forecast 2016 earnings per share (EPS) of 17.4p.

“ITV’s coverage of the last major football tournament, 2014’s World Cup, delivered on a target of driving a 13% rise in advertising revenue for its duration. This was despite England’s worst performance at a World Cup in decades. Reassuringly, the company’s destiny is not determined by the short-term variations in advertising but any boost from the football is a bonus.”

Just Eat 

Mould says: “Takeaway website Just Eat’s share price took a battering earlier this year amid concerns about fierce competition in the market.  However, Just Eat has an impressive track record of growth, which so far hasn’t been hampered by competitors like Deliveroo and Hungry House. Like-for-like orders in the UK, its largest market, grew by 40% in the first quarter of 2016. The stock is extremely cash generative. Cash totalled £192.7m at the end of 2015 and is expected to grow over the next three years as orders continue to rise. With the prospects for large-scale mergers and acquisitions diminishing, this increases the likelihood of Just Eat eventually paying out a dividend.”

Khalaf adds: “Fast food is expecting a bumper summer and the take-away ordering website is set to join Domino’s as a beneficiary. It might have a fight on its hands with competitor Deliveroo though, especially when it comes to delivering prawn sandwiches to Manchester United fans.”

Dixons Carphone

Khalaf says: “For those not crossing the channel the prospect of watching first the Euros and then the Olympics in glorious 55’’ Ultra HD is likely to prove a major draw. As the last man standing in the high street, electrical retailer Dixon’s Carphone – which also own Currys – are an obvious beneficiary.”

Young & Co’s Brewery 

Mould says: “The European Championships are expected to complement further strong organic growth at south east-focused premium pub group Young’s this year. The £539m cap recently reported (19 May) another strong set of full year results, growing ahead of the market and slightly above analysts’ expectations. Pre-tax profit rose by 11% to £35.4m in the 12 months to 28 March 2016, with an impressive 5.6% rise in like-for-like sales in its managed houses. Record cash generation allowed Young’s to invest £45.1m in keeping its pubs in tip-top condition last year. It also increased its dividend for the nineteenth consecutive year.”

Halfords

Khalaf says: “Success at the 2012 Olympics and the Wiggo effect, led Britons to take to cycling like never before. Halfords will be hoping for a repeat from Wiggins, Trott & co. in Rio this year as the group rolls out celebrity branded lines from both gold medallists.

Science in Sport 

Mould says: “This summer’s bonanza should provide a boon for sports nutrition tiddler Science in Sport. Besides being the official sports nutrition supplier to the Team Sky and Team Wiggins cycling teams, Science in Sport is the official supplier of sports drinks and sports nutrition to the GB Rowing Team. Heavyweight brand ambassadors include Olympians Sir Chris Hoy, Mark Cavendish and Katarina Johnson-Thompson.

“As well as cyclists, triathletes and rowers, its customers include tennis players, runners and increasingly, professional footballers at the highest level. As such, demand for its SiS-branded energy powders, isotonic gels and protein bars should be building ahead of the Euro Football Championships, Olympics and Wimbledon.

“Latest full year results showed sales surging 18% higher to £9.45m, particularly strong growth generated through online channels and international markets. Though Science in Sport is currently loss-making while it invests for growth, there’s net cash on the balance sheet following an £8.2m placing.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Surprise ‘out-of-tariff’ mobile charges cost users £800m extra per year

Over the past 12 months, Brits have spent a combined £811m on top of their monthly mobile tariff owing to...

Close