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Companies that have a chance to profit from the FIFA World Cup

Autor: Financial Market
Timp de citit: 4 minute

The FIFA Qatar 2022 World Cup is scheduled to run from November 20 to December 18 this year. In the stadiums and in front of TVs we will be accompanied by football emotions, while on the screens of trading platforms the impressions will not be any less.

How on the world’s largest event of the most popular sport can you not only gain a month of impressions, but also earn on it? „If it’s crazy, it’s crazy,” that is, the Championships

It is believed that the estimated cost of building and preparing to host the World Cup in Qatar is about $220 billion. This is the highest cost in history.

The source of most of the expenses is from the construction of stadiums of international football specifications. As a result, the stadiums are likely to bring long-term benefits to the country, whether they are maintained as sports facilities or not. Other important costs include $440 million in prize money, which is financed by FIFA’s $4.6 billion budget.

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An estimated 1.2 million fans will visit Qatar during the World Cup. This will provide a multibillion-dollar boom for the flag carrier, Qatar Airways, and the country’s hotels and restaurants. And in these industries you can look for the main types of companies that could be the biggest beneficiaries of the World Cup.

And you can be a selector … or at least as far as companies are concerned

The scale of such an endeavor requires a huge amount of capital investment from both the public and private side. The public funds, financial institutions and construction companies that will be involved in the early stages of development have already committed their capital and begun to report returns on their investments.

Given the long period of financing, construction and preparation, FIFA announced the winning bidder as Qatar almost 12 years ago, on December 2, 2010.

Subsequently, the official partners and sponsors of the event were announced. It is those companies that have yet to see a return on their investment in the sporting event that are the most likely candidates for investment today, as these are traditionally the stocks that have gained from the World Cup.

These companies include:

– Qatar Airways

– Qatar Energy

– Adidas

– Coca Cola

– McDonald’s

– Hyundai

– Visa

– Marriott

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Four pillars of soccer investing

Below are the characteristics of four large, well-known and liquid companies that could see growth thanks to the FIFA World Cup 2022.

Adidas Group (ADS.DE)

ADS recently parted ways with Kanye West after some controversial comments by the star. The above situation and inflationary pressures have plunged the company’s already sharply declining stock price.

Falling more than 60% from its late 2021 peaks, ADS has struggled to find its feet in the current situation. The stock climbed more than 10% in 2018, a surge in sales related to the 2018 World Cup more than doubling quarterly revenue compared to the year-earlier result.

Interestingly, Germany’s benchmark DAX index fell 19% in the same year, which may suggest that the material benefit of partnering in the World Cup has overtaken market expectations.

There is a possibility that the recent sell-off is exaggerated, and that the possibility of making a satisfactory profit during the World Cup on revived interest in soccer products represents a profit opportunity for an investor willing to take risks.

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Coca-Cola (KO.US)

Coca – Cola is the largest soft drink company in the world. In a host country that largely disapproves of alcoholic beverages, chances are good that the company will find a willing partner to stock and sell its product lines at this World Cup.

As only non-alcoholic beverages will be available during the games and in many dining and entertainment venues across the country, Coca- Cola is sure to benefit from the influx of visitors to Qatar.

Direct sales at food and beverage establishments in Qatar will account for only a small percentage of the sales the company hopes to achieve through this partnership. The 2018 World Cup was watched by nearly 3.6 billion viewers. This number is expected to be surpassed in 2022.

Coca – Cola spends about $4 billion a year on advertising, and another $400 million has been set aside just for the World Cup advertising campaign.

In 2010. Coca-Cola saw a 5% increase in sales thanks to the event. This represents a $550 million increase in sales thanks to the World Cup alone. Relative to an audience of 3.6 billion or more, advertising spending for the event of $400 million yields a cost per potential customer of just 11 cents per person.

McDonald’s (MCD.US)

McDonald’s is a conglomerate with stores and franchises in almost every corner of the globe. With such a huge platform for its products, the World Cup, with more than 3.6 billion viewers, presents an excellent opportunity to advertise and improve its reputation.

McDonald’s has been a long-time sponsor of the World Cup, but typically does not see a direct increase in sales through this partnership.

Rather, the World Cup is seen as a cost-effective way to reach as many customers as possible. The strategy is well proven – McDonald’s beat estimates for comparable sales and profit in its latest quarterly report. The stock rebounded 3.5% after that news.

With a solid dividend yield of 2.3% combined with 20% revenue growth for calendar year 2021, McDonald’s provides a steady and predictable revenue stream, much like Coca-Cola.

Marriot (MAR.US)

Marriot, with its properties in Qatar, including the five-star Ritz-Carlton, will see direct benefits from an additional 1.2 million paying customers during the World Cup.

Marriot reported a slight YTD decline of nearly 5%, after suffering from rising wages, reduced customer flow and labor problems during the recent COVID pandemic. However, it has managed to beat its newest rival, as Airbnb’s share price has fallen 32% this year.

The return to normalization has cemented the business model in the eyes of business and leisure travelers as a quality service with an easy-to-understand payment structure and without the extra fees that can come with booking with Airbnb.

The convenience and enjoyment of staying at Marriot is a very sustainable service offering that stock investors have also recognized.

Trailing twelve-month (TTM) gross margin is now 21%, compared to 15% before the pandemic. So while TTM revenue is still 15% below 2019, net income is now nearly 40% higher.

Marriot is certainly a stock in an industry that many have already written off as an outdated and endangered business model compared to Airbnb’s spectacular growth. However, the company’s performance continues to improve, so it’s a stock worth considering.