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The Madness starts today, in fact, by the time you start reading
this your bracket should already be filled out and submitted.
Picking upsets is fun, but the real winner of your local pool will
likely have selected the overall winner. I suggest that you pick
THE Ohio State Buckeyes if you want to take it all down, but what
four stocks that could benefit from the Madness.
I scanned the list of Zacks Rank #1 (Strong Buy) and #2 (Buy)
stocks to see which ones might correlate to the NCAA men's
basketball tournament that starts today.
The Ohio State faithful travel with their team, be it football or
basketball or just about any sport. The same can be said about
many other teams, but main idea is that they are going to have to
rest their travel weary heads on a soft pillow at the end of the
Wyndham Worldwide (WYN - Analyst Report) is a Zacks Rank
#2 (Buy) and operates hotels and resorts throughout the country.
Chances are that the Buckeye fans will not have to stay in a hotel
in Dayton Ohio for the first round matchup against Iona... but
there are 62 other teams with traveling fans.
When I look at WYN, I see an impeccable earnings history. The
company has posted positive earnings surprises in each of the last
26 quarters. That is some sort of win streak! The Buckeyes only
need to win 5 straight to bring home the hardware.
Earnings estimates for WYN have been moving higher throughout
2012, with 2013 estimates moving from $3.39 at this time last year
to the current level of $3.69.
Watching At Home
I have a full day to wait to see my Buckeye's in action against
the Gaels. So I will relax in comfort watching some of those
other teams win or lose in a comfy chair. I think there will be
plenty of others doing the same thing.
A lot of hoop fans will be in their favorite La-Z-Boy (LZB - Snapshot Report) chair. As a
Zacks Rank #1 (Strong Buy) they could add it to their portfolio as
When I take a look at LZB, I see a stock that has seen its
revenues grow nicely over the last several quarters. The Jan 2013
quarter saw revenue of $349M, up from $317M in the year ago period
or an increase of more than 10%. They also have a net margin of
3.7%, better than the 3.3% industry average. The Buckeyes,
however, brought in $16M in revenue in 2011 against $4.5M in
expenses for a profit of $11.6M or a margin that was tops in the
Estimates have recently ticked higher for LZB for 2013. We
started the year with estimates of $0.76, but that has increased
to $0.77 in February and now stands at $0.79. There have been
similar moves for 2014 estimates which now stand at $1.10.
Wearing Your Colors
My inclusion of Big Five Sporting Goods (BGFV - Analyst Report) comes with a
Stephen Colbert-esque wag of the finger. Seems this west coast
based sporting goods retailer doesn't carry any Ohio State
University products. Granted I just did a single search on the
website that revealed only PAC-12 teams or other western schools.
I can only suggest they start to carry gear of the likely winner
of March Madness (and probably the National Championship in
football next year too).
Everyone likes a winner and BGFV has delivered some earnings
"wins" of late. Think of the "wins" as positive earnings
surprises, of which BGFV has had 3 straight. over the last seven
quarters there was only one earnings miss. Over the last seven
games, the Buckeyes have 7 wins.
Estimates for BGFV have been trending higher, with the Zacks Consensus Estimate for 2013 moving from $0.77 in August 2012 to the current level of $1.07. That is a big move of 39%!
When The Buckeyes Win
I will be celebrating two times during the NCAA Tournament that starts today. One will come when the Buckeyes win it all, and the other celebration will come much earlier, and likely by the end of this weekend. That early celebration will happen when that team up north loses to either South Dakota State or the winner of the VCU vs Akron match up.
Each celebration will involve a toast of a tasty beverage made by Molson Coors Brewing (TAP - Analyst Report). As a Zacks Rank #2 (Buy) Molson Coors might be able to help your portfolio with a toast as well. TAP has delivered positive earnings surprises in each of the last five quarters, with the average beat coming in at a healthy 14%.
Estimates for TAP have bubbled up of late. The 2013 Zacks Consensus Estimate for TAP foamed up from $3.92 in November to $3.96 in December and now stands at $4.01. There were similar moves in the 2014 estimate which has reached a head of $4.23. That represents a 5.5% implied earnings growth rate.
The NCAA Tournament can be a lot of fun for fans to watch. I hope that your teams does as well if not better than the Buckeyes (is that even possible?). These stocks might see a mild benefit from March Madness, but their high Zacks Rank should be a great start to your research on these Final Four names.
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Brian Bolan is a Stock Strategist
Zacks.com. He is the Editor in charge of the Zacks Home Run Investor
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