The FIFA World Cup Qatar 2022 is scheduled to run this year from 20th November to 18th December. With the competition and festivities just around the corner, Asktraders has come up with another way to participate in the quadrennial tournament, via the stock market.
YOUR CAPITAL IS AT RISK
The estimated cost of construction and hosting preparations for the World Cup in Qatar is believed to be approximately $220bn US dollars. The most expensive on record.
The majority of the expense is generated from the construction of the international football specification stadiums. The steep bill is the result of the relative greenfield sporting infrastructure compared to, for example, the UK. With that in mind, the stadiums have the potential to provide lasting benefits to the country whether maintained as sporting grounds or not.
Some of the other big-ticket items of note include the $440m in prize money funded by FIFA’s $4.6bn budget. One can expect the advertising dollars attached to regional broadcasters to be orders of magnitude again of that figure.
Approximately 1.2 million customers will visit Qatar during the World Cup. Providing a multi-billion dollar boon to the flag carrier, Qatar Airways, and the hotels and restaurants in the country.
Every four years there are certain stocks that profit from the football world cup, there are also regional stocks and tourism/leisure stocks that see an uptick during tournaments . In this article we've highlight key stocks and trading opportunities specifically around the world cup in Qatar.
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Companies Involved In The World Cup
The magnitude of such an undertaking requires a great deal of public and private capital. The public funds, financiers, and construction companies that will be involved in the early stage of development have already committed their capital and started to report earnings on their investments.
Given the long lead time on financing, construction, and preparation, FIFA announced the winning bidder as Qatar almost 12 years ago, on 2nd December 2010.
Further along the timeline, the official partners and sponsors of the event were announced. It is these companies that are yet to see their return on the event and are the most likely candidates for an investment today as traditionally they are stocks that profit from the Football World Cup.
These companies include but are not limited to:
- Qatar Airways
- Qatar Energy
- Adidas
- Coca Cola
- McDonald’s
- Hyundai
- Visa
FOUR STOCKS FOR YOU TO CONSIDER TODAY
Here we have compiled a list of liquid companies that are simple to acquire on the stock market and likely to benefit and display exponential growth from the FIFA World Cup 2022.
- Adidas Group (XETRA:ADS)
- The Coca-Cola Company (NYSE:IKO)
- McDonald’s Corporation (NYSE:MCD)
- Marriott International Inc (NASDAQ:MAR)
Adidas Group XETRA:ADS (ADS)
ADS recently went its separate ways with Kanye West following some controversial comments from the celebrity. The pain of the split piled onto the inflationary and retail pressure the company is already under. Down over 60% from the end of 2021 highs, ADS has struggled to find a footing in this current downturn.
As yet unable to return to the pre-pandemic revenue highs, investors have grown impatient with the stock.
The recent action provides an opportunity for the investor willing to take a chance on a turnaround and the World Cup could just be that opportunity.
During 2018 the stock climbed over 10%, the surge of sales related to the world cup in 2018 more than doubling the quarterly revenue in which it occurred compared to the previous.
The benchmark German index, the DAX, fell 19% over the same calendar year, 2018, suggesting there was a material benefit from partnering with the World Cup above and beyond the market expectations.
ADS is currently trading at a modest 16.4 P/E, with top-line revenue at the end of June 2022 6% (22% annualised) higher quarter-over-quarter.
There is the possibility the recent selling is overdone, and the opportunity to turn a healthy profit at the World Cup on a revitalised interest in associated football products presents the opportunity to profit for the investor willing to take a chance on a turnaround in this stock.
The Coca-Cola Company (NYSE:KO)
KO is the largest non-alcoholic beverage company in the world. In a host country that largely disapproves of alcoholic beverages, KO will find a willing partner to stock and market its product lines at this World Cup.
With the games and many of the meal and entertainment venues around the country supplying only non-alcoholic beverages, KO will certainly benefit from the flood of visitors to Qatar.
This will only form a small percentage of the sales that KO hopes to make from this partnership. The World Cup audience is enormous, sparring with the Olympics for the title of most watched sporting event in history. The 2018 World Cup was watched by almost 3.6 billion. All expectations are that this figure in 2022 will be surpassed.
KO spends around $4bn US dollars per year on advertising, and another $400m US dollars has been set aside just for the World Cup advertising campaign.
In 2010, Coca-Cola saw a 5% uptick in sales from the event. This translates to a $550m boost in sales just from the World Cup. The intangibles of the presence have additional duration in the minds of the consumer and will provide additional returns.
After all, against an audience of 3.6bn or more, the advertising spends for the event of $400m equates to just 11 cents per potential customer.
KO is famously the darling of Warren Buffet’s Berkshire Hathaway, and the solid appreciation over time of this stock can be attributed to its savvy advertising partnerships, global reach, stable margins and dividend, currently yielding 3%.
As the audience for the World Cup continues to grow, KO will remain in the minds of the consumer as the premier non-alcoholic beverage company and provide a stable base for any investor’s portfolio.
McDonald’s Corporation (NYSE:MCD)
MCD is a company with stores and franchises in nearly every corner of the globe. With such an enormous platform for its products, the World Cup, with its more than 3.6 billion viewers, provides the perfect opportunity to keep its product fresh in the minds of its customers and burnish its reputation.
MCD is a long-time sponsor of the World Cup, though doesn’t ordinarily see direct sales increase from the partnership. The World Cup is more of a brand global outreach and is seen to be a cost-effective way to reach as many customers as possible.
The strategy is well proven – MCD beat comparable sales and profit estimates in its latest quarterly report. The stock bounced 3.5% on the news and is close to even on the year in a market that has shed approximately 20%.
With a solid dividend yield of 2.3% paired with top-line revenue growth of 20% for the calendar year 2021, MCD provides the dependable and consistent returns that KO does, year in and year out.
With several MCD locations in Qatar, foot traffic over the World Cup will provide a welcome boost to income for the local franchise holders, but it is the shareholders that will benefit most from the international messaging provided by the pairing with this global event.
Marriott International Inc (NASDAQ:MAR)
MAR, with its properties in Qatar including the five-star Ritz-Carlton, will be benefiting directly from the additional 1.2 million paying customers staying during the World Cup.
MAR is down a modest 5% year-to-date, having suffered at the hands of rising wages, restricted customer movements, and labour difficulties under COVID in recent times. However, it has beaten out its newest rival as the Airbnb share price has tumbled 32% this year.
The return to normalisation has solidified the business model in the eyes of business and leisure travel as a quality service with an easy-to-follow payment structure and no additional fees that might come with an Airbnb booking.
The convenience and pleasure of a MAR stay is a very durable service offering and one that the stock investors have recognised as well.
Revenue growth continues to impress and the trailing twelve-month (TTM) top line is narrowing in on those pre-pandemic figures, while the opportunity to clean house during the pandemic downswing has resulted in much improved margins from their properties.
The TTM gross margin is currently 21% compared to 15% pre-pandemic. So while TTM revenues are still 15% below 2019, the net income is currently higher by almost 40%.
MAR is certainly a stock that many wrote off as an antiquated and threatened business model under the stratospheric rise in Airbnb. Yet the operations continue to improve along with the customers and certainly a stock to consider worth your consideration.
Final Thoughts
As one of the premier and most watched sporting events in the world, the FIFA World Cup is the perfect opportunity for businesses to relay their message to a global audience. Through the magic of capital markets, the opportunity to participate is, in turn, presented to the stock market investor, and with a little knowledge you can take advantage of the stocks that profit from the football world cup.
Asktraders has a wealth of quantitative and qualitative analysis at your disposal. Navigate to our list of top brokers, consider your trading strategies and always conduct due diligence before making any investment.
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