Four Blue Chips About to Get an Olympic Boost

Posted by Wealth Wire - Wednesday, July 18th, 2012

Some of your favorite blue-chip stocks may be about to get a boost that only comes along once every four years.

The London Olympics begin in earnest next Friday, July 27. As always, the world will be watching. And that’s big business for the companies that shelled out millions of dollars to sponsor the 17-day event.

Consider: the 2008 Summer Olympics, held in Beijing, was the most watched sporting event ever. With many of the same cast of characters – Michael Phelps, Usain Bolt, the LeBron James and Kobe Bryant-led U.S. basketball team – returning, this year’s ratings could be even bigger.

Sponsors for the London Olympics have already sold more than $1 billion in TV ad spots – exceeding NBC’s $850 million haul for the record-setting Beijing Games.

The companies paying all that money to be an Olympic sponsor typically see quite a return on their investment. Having 4.7 billion viewers repeatedly seeing your ads over the course of two-and-a-half weeks tends to get you a few extra customers.

All those extra customers can make for a strong quarter, which often translates to a rising stock. In fact, many of the companies that sponsored the Beijing Olympics saw sharp spikes in their stock prices in the months that followed.

Here are four blue-chip stocks that stand to gain from the London Olympics:

  • Procter & Gamble (NYSE: PG): As one of 10 official corporate partners of this year’s Games, the U.S. consumer-products giant had to fork over at least $100 million for the rights. It will probably be worth the investment. Procter & Gamble was also an official sponsor of the Beijing Games, and that summer the stock got a 14.6% boost – more than any other major sponsor over that time span. P&G could use a similar boost this year. The shares are down 2.7% in 2012 despite recent gains.
  • Comcast (NYSE: CMCSA): Fresh off airing the most-watched sporting event in American history, now Comcast gets to take on the world. The cable- and TV-network operator owns the rights to NBCUniversal, which in February broadcast Super Bowl XLVI to a record U.S. audience of 111 million viewers. The Super Bowl broadcast helped propel Comcast to 30% year-over-year earnings growth in the first quarter despite the company’s slumping video subscription business. It’s not unrealistic to think that airing the London Olympics will have a similar impact.
  • Visa (NYSE: V): Another regular corporate sponsor that got a nice push after the last Olympics. Visa commercials seem to air non-stop during the Olympics, which perhaps had something to do with why the stock popped 5% during the Beijing Olympics. The shares are already up 25% in 2012 and are trading close to 52-week highs, so this year’s bump may not be as pronounced. Nonetheless, Visa should get plenty of bang for its considerable buck in the coming month.
  • Nike (NYSE: NKE): The world’s largest sports apparel company isn’t an official sponsor of the Games (that would be German-owned Adidas). But Nike has plenty of ties to some of the more prominent individual athletes we’ll be cheering for in London. The company has deals with the aforementioned Phelps and Bolt – the biggest stars of the Beijing Games, each of whom will be featured prominently again in these Games. With ties to a number of other athletes, perhaps Nike will strike gold again this Olympics and stumble on the next big star. Regardless, the 15% spike the stock received in the weeks after the Beijing Games shows that Nike’s Olympic presence can result in massive returns.

*Post courtesy of Ian Wyatt of Wyatt Investment Research.

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