The Three Weirdest World Cup Plays
The World Cup is kicking it into high gear. Every day now four matches are played and the advancing teams are decided. Each group plays its games simultaneously, thus preventing the kind of collusion that happened in Spain in 1982 between Austria and West Germany. That poor excuse for a competition was shocking - a far cry from the exciting upsets occurring daily in South Africa.
Of course sports fans, like investors, know that without oversight there is an uneven playing field.
***The U.S. is playing for their tournament life today against Algeria. A win would guarantee they advance, a draw would leave it up to the results from other matches, and a loss officially puts them out of contention. Let's hope Landon Donovan can lead the boys to the second round.
In 2006 the World Cup final game was between European power houses France and Italy. Now the French are out, and the Italians are holding on for dear life. Both sides have been done in by two of the lowest ranked teams in the tourney; South Africa and New Zealand. Without a doubt this is a World Cup of oddballs.
These stunning results got me thinking about how sometimes oddballs can be the best bet. Sometimes you just have think outside the box. With that in mind, I present to you the three strangest small-cap stocks that have the potential to benefit from the World Cup!
Dick's Sporting Goods (NYSE: DKS)
The World Cup is the biggest stage for soccer. It represents nations across the world engaging in 'friendly' competition. As we've seen with North Korea, it can bridge divides and engender peace and friendship. The World Cup also manages to sell a heap of merchandise!
Dick's Sporting Goods (NYSE: DKS) is on the larger side of the small-cap spectrum with a market cap of $3 billion. The sports equipment and apparel store is the only licensed retailer to use U.S. Soccer Federation trademarks. If the perennial underdog Americans do well in the tourney, Dick's is sure to see a significant bump in revenue. Today's U.S. v. Algeria game is make or break for Landon Donovan and Company. I wouldn't be surprised if more than a few execs over at Dick's will be glued to their television screens.
La-Z-Boy (NYSE: LZB)
La-Z-Boy (NYSE: LZB), the name in recliners and other relaxation based furniture, has a market cap of $467 million. Shares of the stock took a 17.4% tumble last Tuesday as management issued a cautious outlook going into fiscal 2011. The company's raw material costs are rising, and consumers are still fearful of making the big-ticket purchases that La-Z-Boy depends on. Aside from these words of warning, nothing yet has changed for the company fundamentally, and they announced a better than expected quarter.
ESPN is reporting its highest viewership ever for the games. Americans are watching. Fourteen million Americans tuned in to watch the U.S. upset England. All these Americans are going to have to plop themselves onto something, maybe it will be a La-Z-Boy. The downside to this selection is that many are probably watching from work, and managers are likely reluctant to encourage extreme lounging at the office.
The World Cup won't have a marked effect on La-Z-Boy's revenue. However, after the company lowered guidance for the future the stock most likely over-reacted. If the company beats what are now much lower expectations, the stock price should bounce back.
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Green Mountain Coffee Roasters (NASDAQ: GMCR)
Having the World Cup in South Africa is great. It gives an oft overlooked continent the chance to show off on one of the world's greatest stages. It demonstrates the international appeal of the game.
It also means some games are way too early.
The 6-hour time difference between the east coast of the U.S. and South Africa means that American's won't be enjoy these World Cup games with a cold beer. At seven in the morning, I would much rather be sipping a fresh-brewed cup of Joe.
Green Mountain Coffee Roasters (Nasdaq: GMCR) is enjoying success with their k-cups and Keurig brewing system. Year on year, Green Mountain grew revenues 60.52% while net income improved 150.60%. You don't see many mature companies putting up those kinds of numbers.
Coffee prices are on the rise, market penetration could be slowing, and competition seems to be increasing, but Green Mountain has navigated challenges before. It also should be insulated from the scarcity induced price surge in coffee beans. The company buys beans on contract and is already locked in for the year.
***These three companies aren't going to see sales surge because of the world cup - but it is fun to find connections between companies and popular events. And they are good companies on their own, so you may be interested in them for other reasons.
Late this week I'll be putting out a Special Report on three companies with shorter-term upside - it's a report based on the Russell Reconstitution. I selected three terrific growth companies that should make it into the final draft of the new Russell this Friday. Last year, stocks included in the new Russell saw a one day 8% bounce.
I'll let you know when this report is available. Until then, enjoy the games.
