With Super Bowl Sunday festivities ready to kick off, investors looking for a sure bet would be wise to watch the commercials. Buying the stock of publicly traded companies that run advertisements on game day has historically been a recipe for success, say researchers at the University of Wisconsin-Eau Claire.
Charles Tomkovick and Rama Yelkur, who have conducted Super Bowl advertising research for more than a decade, say that the aggregate stock price of firms that run Super Bowl advertisements has beaten the Standard & Poor's 500 performance for 10 of the last 12 years.
According to their findings, if an investor bought every publicly traded Super Bowl stock in the last 12 years on the Monday before the game and sold them all five days after Super Sunday, he or she would be up by nearly 1.3 percentage points over the S&P 500 during the same time period.
"It's a significant finding because, in essence, Wall Street rewards firms that run Super Bowl ads," says Tomkovick. "It's a tradable event."
The researchers' winning categories of companies that run ads during the Super Bowl and whose stocks go up around the same time include movie studios, technology, consumer packaged goods, travel, over-the-counter medicines and beverages.
If you are looking for a way to cash in on football's biggest day this year, here are the researchers' predictions about four stocks that are ripe for the picking.
Movie studio stocks reflect not only the financial trajectory of the film industry but that of TV channels and other media categories under the same brand. According to the University of Wisconsin researchers, they are the best performing stock in the two weeks flanking Super Sunday. "Investors typically have a high level of comfort with this category, because its stocks are very receptive to the short-term trading atmosphere of the Super Bowl." Among this year's advertisers are Universal Pictures , Paramount Pictures and New Line Cinema .
Procter & Gamble:
In recessionary times staples tend to do better, says Tomkovick. Regardless of market conditions, people are still going to buy soap, detergent and bathroom tissue. P&G also falls into the consumer packaged goods category, which has done exceptionally well.
In times of economic uncertainty, the employment category is highly relevant. This company actually built its brand through the Super Bowl, says Tomkovick. CareerBuilder.com is jointly owned by three big newspaper publishing companies -- Gannett Co. , Tribune Co. and McClatchy Co.:
Technology companies do well on game day; in 2007 they were up 4.6% at this time of the year. This particular GPS navigation firm ran its first Super Bowl commercial last year, which also happened to be one of the most talked about ads.
As far as what companies to avoid, Tomkovick and Yelkur say one type of Super Bowl stock investors would be better off staying away from is the car category. That's because the market is already familiar with the major players, who are the most likely to run ads during Super Sunday, so the element of novelty is minimal. Besides, most people are not thinking about buying a car so soon after the holidays, and the stock is unlikely to rise significantly.
Finally, Tomkovick advises that despite the net positive association between Super Bowl advertising and the financial performance of the firms that invest in it, there is no hard-and-fast connection between the two. Investors should still focus on the strength of their entire portfolio, rather than on an individual stock.
By Marshall Loeb