4 Ways to Play World Cup Stocks

James Dennin, Kapitall: Could FIFA move the needle for these 8 companies? Behold, our index of World Cup stocks. 

Even though the home team usually enjoys a slight advantage, the South African World Cup team's blowout wins in their preliminary matches still turned heads. In the 2 pre-tournament friendlies, South Africa won by 5 goals and 2 goals, both against higher ranked teams.  The fact that referees awarded the South Africans 3 penalty kicks each game, caused some suspicion about the result.

[Read more about the World Cup from Kapitall: Are These Soccer Sponsors Qualifiers for a World Cup Index?]

Though the Fédération Internationale de Football Association (FIFA) is tasked with keeping the most-watched sporting event in the world, and a tournament that generates billions in revenue over the month it plays out, honest, they still haven't quite eliminated the threat of fixed games. 

Almost  1 in 10 athletes polled said they had been approached by game fixers offering cash bribes. Since many of the players in the World Cup aren't millionaires (second tier South Korean football clubs, for instance, don't always pay out the big bucks) it is a big liability. 

Contrary to what you might think, it isn't the finals that authorities are worried about. It's the early round group games which they say are the most vulnerable, especially amongst players who's teams have no chance of advancing. FIFA is going to great lengths to prevent the practice anyway, because there's a lot of money at stake. 

Investing Ideas

To start, some banks are predicting that the World Cup and Olympics will boost Brazilian GDP by 1.5% in 2014 alone. A lot of that is expected to be on infrastructure and construction. EGShares Brazil Infrastructure ETF (BRXX), whose holdings all relate to the construction industry and which has outperformed other Brazilian-related ETFs, offer one way to gain broad leverage in the Brazilian building boom. 

Look at the sponsoring companies for another way to play the World Cup. Coca Cola (KO) saw a 15% bump in German sales volume during the World Cup in 2006. 

One of the biggest sponsors of this year's games is McDonalds (MCD). If you're skeptical about whether a marketing push could really move the needle for such a large company, you can also buy ADRs of their Latin and South American franchiser  Arcos Dorados Holdings (ARCO)

Online book-keepers may present another opportunity. While many of the companies that participate in online gambling are located overseas,share of China based  500.com (WBAI) trade in the US. Online bookies could see as much as a 100% jump in volume depending on which teams advance the farthest. 

Individual team sponsors may also see a bump. This is a risky play because sponsorship of an individual team can be a huge let-down if they don't play well. If you're bullish on the home team though, you can buy a chunk of their success by looking at Team Brazil's major corporate sponsors  Mastercard (MA) and BRF Foods (BRFS)

Click on the interactive chart to view data over time. 

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1. Nike Inc. ( NKE): Designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children worldwide. Market cap at $69.12B, most recent closing price at $77.84.

Nike sponsors or makes the jersies for a number of major teams including Team Brazil. 

 

 

2. Caterpillar Inc. ( CAT): Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Market cap at $62.09B, most recent closing price at $97.32.

Caterpillar is heaviliy involved in the construction leading up to the games and has won several lucrative contracts to suppy equipment to Brazil's energy sector. 

 

 

3. Mastercard Incorporated ( MA): Provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers' cheque programs. Market cap at $91.23B, most recent closing price at $75.96.

Sponsors Team Brazil.

 

 

4. BRF – Brasil Foods S.A. ( BRFS): Produces and sells poultry, pork, beef cuts, milk, dairy products, and processed food products in Brazil and internationally. Market cap at $14.89B, most recent closing price at $17.10.

Also sponsors Team Brazil.

 

 

5. 500.com Limited ( WBAI): Provides online sports lottery services in the People's Republic of China. Market cap at $1.05B, most recent closing price at $45.77.

Traffic at sports lottery websites like 500.com could almost double during The World Cup, according to some analysts

 

 

6. AECOM Technology Corporation ( ACM): AECOM Technology Corporation and its subsidiaries provide professional technical and management support services to government and commercial clients worldwide. Market cap at $2.94B, most recent closing price at $30.56.

AECOM Technology Corporation has the contract to build the Rio 2016 Olympic Park and many other stadiums in Brazil for the World Cup. 

 

 

7. Arcos Dorados Holdings Inc. Cla ( ARCO): Operates as a franchisee of McDonald’s restaurants. Market cap at $1.86B, most recent closing price at $8.88.

McDonalds is a major sponsor of The World Cup, and sponsors usually see spikes in sales volume, particularly in the host country. 

 

 

8. Anheuser-Busch InBev ( BUD): Engages in brewing and selling beer in North America, Latin America, Europe, and the Asia Pacific. Market cap at $169.48B, most recent closing price at $103.15.

Anheuser-Busch InBev is the exlusive beer provider for the World Cup, and successfully lobbied Brazil's government to repeal a ban on drinking at soccer matches. 

 

(List compiled by James Dennin, a Kapitall Writer. Monthly returns sourced from Zacks Investment Research, all other data sourced from Finviz.)

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