MILLBURN, N.J. (TheStreet) -- On Wednesday, weather permitting, the New York Yankees will begin the quest for their 27th World Series championship, challenging reigning champs the Philadelphia Phillies. But before you plop down in your Barcalounger, don your favorite team's attire and throw back a cold one, here is the Finance Professor's guide to investing for the World Series.
Do you have your Alex Rodriguez or Ryan Howard jersey? How about that navy blue Yankee hat with the interlocking "NY" or the fire-red Phillies hat with the fancy "P"? You'll probably want to decorate that den with a few team banners and knickknacks as well, and it's getting cold out there, so maybe a team throw blanket will warm you up during the late-night games.
You can find all of those items at
Dick's Sporting Goods
, a sporting goods and apparel chain with 409 stores nationwide. In New York State, it has 31 stores. In New Jersey, which connects New York with Philadelphia by way of the Amtrak train line and New Jersey Turnpike, it has another 13 stores. In all of Pennsylvania, there are another 36 stores, eight of which are in the Philadelphia metro area.
All told, anywhere between 52 and 80 Dick's stores cover Yankee and Phillies territory, or about 13% to 20% of all Dick's stores. This doesn't include stores in areas where many displaced New Yorkers or Philadelphians live. A World Series, Super Bowl or NCAA Final Four can add a few percentage points to sales. A 5% increase to 20% of stores adds 1% to same-store sales for the month.
You'll surely require some liquid refreshments for the World Series. Let's start with the suds.
was formed by the acquisition of the old Anheuser-Busch beer company by InBev, a Belgian company. In order to fund this $52 billion purchase, InBev issued nearly $45 billion in debt. Currently, the company carries about $55 billion in debt, quite a large load for a $135 billion market-cap company. The company was delisted in the U.S. markets immediately after the acquisition and then relisted in July 2009. It has issued only one quarter's worth of combined results so far.
At this point in time, I do not believe that there is enough data to make more than a guess on Anheuser-Busch InBev. Furthermore, I am reluctant to recommend purchasing a company with a huge amount of debt.
Molson Coors Brewing
brews, sells and distributes many well-known beer labels, including Molson, Coors, Miller High Life, Amstel Light and Asahi, as well as other lesser-known brands. Product-wise, Molson Coors' beers compete directly with many of the Anheuser-Busch labels, such as Budweiser and Michelob.
Sales growth has been rather spotty over the past few years, with 5.9% growth in 2007, an 8% loss in 2008 and 2% growth in the first half of 2009. Earnings per share have had far more variation, increasing 31.5% in 2007, declining 23.9% in 2008 and rising 118% for the first half of 2009. Gross profit margins for Molson Coors have been in a steady decline over the past few years, going from 46% in 2007 to 40% in 2008 and so far 39% in 2009. That is not a trend I'm excited about.
One of my favorite beers and beer companies is
, which was founded as a local brewery in 1984 and has since gone national and, to a less extent, international. Boston Beer produces hand-crafted beer under the Sam Adams brand name and flavored malt beverages under the Twisted Tea label. The company manufactures year-round beers such as Sam Adams Boston Lager as well as a variety of seasonal, specialty and flavored beers. All beers are sold either in brown bottles to ensure full flavor and decrease spoilage or in draught for bars and restaurants.
Boston Beer has delivered steady and consistent earnings growth over the past four years and is expected to do so again in 2009 and 2010. EPS is expected to grow 6.8% in 2009 and 15.7% in 2010. The five-year revenue growth rate is nearly 19%. Given that it is a fast-growing brand and controls only 0.5% market share in the U.S., the company has ample opportunity for future growth at rates comparable to those it has enjoyed in the past.
Finally, for those of you who prefer nonalcoholic beverages, there are plenty of companies to choose from, including the triumvirate of carbonated beverages:
Dr. Pepper Snapple
. These companies have not only sodas but also a whole variety of bottled waters, juices, juice drinks, sports drinks, vitamin waters and teas. Pepsi has one distinct advantage over its competition: its Frito-Lay snack division, which leads me to the next category of World Series investment opportunities.
What's on the Menu
Does anything go with a ball game like a good old American hot dog? Even if you're watching the game from the comfort of your own living room, you're in luck, because many of the hot dogs you eat at the stadium are also available in grocery stores, including Ball Park Franks, made by
; and Hebrew National, a
brand. Of all these companies, I like Nathan's the best because the company sells products both in supermarkets and restaurants, some of which are located right in the new Yankee Stadium.
Perhaps you prefer to order in some pizza, in which case, let's take a look at three national pizza chains:
and Pizza Hut, which is owned by
. These pizza chains have added more variety to their takeout and delivery menus with items such as chicken wings, salads, pastas and sandwiches. On a fundamental basis, I like Yum! the best because it operates several brands in addition to Pizza Hut, including Taco Bell, KFC, A&W and Long John Silver's, with tremendous growth outside the U.S., particularly in China.
I cover the entire food and beverage industry in my newsletter,
Fox Sports, a
television network, will be covering the World Series. Working in Fox's favor is that the World Series is between a New York team and a Philadelphia team. The New York metro area is the largest in the nation, with about 19 million people, and the Philadelphia metro area is the fifth largest, with nearly 6 million people. Together they represent about 8% of the total U.S. population. The ultimate media combination would be New York vs. Los Angeles, but that was not fated to happen in 2009.
Another factor that could work in Fox's favor is the length of the World Series. It's a best-out-of-seven-games competition, so the longer it takes for a team to win four games, the more games Fox will broadcast. That means more viewership and more commercial advertising.
May the best team win!
-- Written by Scott Rothbort in Millburn, N.J.
At the time of publication, Rothbort was long DKS, YUM, PEP, DPZ and SAM and was short PZZA, although positions can change at any time.
Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site
Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.
Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.
For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at
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