Final 4 stocks for March Madness
Win or lose, every fan should have a nice room, a comfy chair, good gear and a cold beer.
By Brian Bolan, Zacks Investment Research
The Madness has started, in fact, by the time you read this your bracket should already be filled out and submitted. Picking upsets is fun, but the real winner of your local pool will likely have selected the overall winner. I suggest that you pick the Ohio State Buckeyes if you want to take it all down, but what four stocks that could benefit from the Madness.
I scanned the list of Zacks Rank No. 1 (Strong Buy) and No. 2 (Buy) stocks to see which ones might correlate to the NCAA men's basketball tournament that starts today.
The Ohio State faithful travel with their team, be it football or basketball or just about any sport. The same can be said about many other teams, but main idea is that they are going to have to rest their travel weary heads on a soft pillow at the end of the night.
Wyndham Worldwide (WYN) is a Zacks Rank No. 2 (Buy) and operates hotels and resorts throughout the country. Chances are that the Buckeye fans will not have to stay in a hotel in Dayton Ohio for the first round matchup against Iona... but there are 62 other teams with traveling fans.
When I look at WYN, I see an impeccable earnings history. The company has posted positive earnings surprises in each of the last 26 quarters. That is some sort of win streak! The Buckeyes only need to win 5 straight to bring home the hardware.
Earnings estimates for WYN have been moving higher throughout 2012, with 2013 estimates moving from $3.39 at this time last year to the current level of $3.69.
Watching at home
I have a full day to wait to see my Buckeye's in action against the Gaels. So I will relax in comfort watching some of those other teams win or lose in a comfy chair. I think there will be plenty of others doing the same thing.
A lot of hoop fans will be in their favorite La-Z-Boy (LZB) chair. As a Zacks Rank No. 1 (Strong Buy) they could add it to their portfolio as well!
When I take a look at LZB, I see a stock that has seen its revenues grow nicely over the last several quarters. The Jan 2013 quarter saw revenue of $349M, up from $317M in the year ago period or an increase of more than 10%. They also have a net margin of 3.7%, better than the 3.3% industry average. The Buckeyes, however, brought in $16M in revenue in 2011 against $4.5M in expenses for a profit of $11.6M or a margin that was tops in the Big Ten.
Estimates have recently ticked higher for LZB for 2013. We started the year with estimates of $0.76, but that has increased to $0.77 in February and now stands at $0.79. There have been similar moves for 2014 estimates which now stand at $1.10.
Wearing your colors
My inclusion of Big Five Sporting Goods (BGFV) comes with a Stephen Colbert-esque ‘wag of the finger.’ Seems this west coast based sporting goods retailer doesn't carry any Ohio State University products. Granted I just did a single search on the website that revealed only PAC-12 teams or other western schools. I can only suggest they start to carry gear of the likely winner of March Madness (and probably the National Championship in football next year too).
Everyone likes a winner and BGFV has delivered some earnings "wins" of late. Think of the "wins" as positive earnings surprises, of which BGFV has had 3 straight. over the last seven quarters there was only one earnings miss. Over the last seven games, the Buckeyes have 7 wins.
Estimates for BGFV have been trending higher, with the Zacks Consensus Estimate for 2013 moving from $0.77 in August 2012 to the current level of $1.07. That is a big move of 39%!
When the Buckeyes win
I will be celebrating two times during the NCAA Tournament that starts today. One will come when the Buckeyes win it all, and the other celebration will come much earlier, and likely by the end of this weekend. That early celebration will happen when 'that team up north' loses to either South Dakota State or the winner of the VCU vs Akron match up.
Each celebration will involve a toast of a tasty beverage made by Molson Coors Brewing (TAP). As a Zacks Rank No. 2 (Buy) Molson Coors might be able to help your portfolio with a toast as well. TAP has delivered positive earnings surprises in each of the last five quarters, with the average beat coming in at a healthy 14%.
Estimates for TAP have bubbled up of late. The 2013 Zacks Consensus Estimate for TAP foamed up from $3.92 in November to $3.96 in December and now stands at $4.01. There were similar moves in the 2014 estimate which has reached a head of $4.23. That represents a 5.5% implied earnings growth rate.
The NCAA Tournament can be a lot of fun for fans to watch. I hope that your teams does as well if not better than the Buckeyes (is that even possible?). These stocks might see a mild benefit from March Madness, but their high Zacks Rank should be a great start to your research on these Final Four names.
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