The NFL playoffs are down to the final four teams: Kansas City and Baltimore in the AFC and Detroit and San Francisco in the NFC. That’s got me thinking about Super Bowl stocks.
Before I get into my three Super Bowl stock picks, I must explain what a Super Bowl stock pick is. Most investors, if asked, would consider Super Bowl stocks to be brands benefiting from the big game held every February.
Interestingly, America’s top four automotive brands won’t be advertising at Super Bowl 58 for the first time in 23 years. Yahoo Finance reported:
“’With a continued focus on preserving business fundamentals to mitigate the impact of a challenging U.S. automotive market …we will not be participating in the Big Game this year,’ wrote a Stellantis spokesperson in a statement to Fortune.”
That doesn’t mean there won’t be automotive content: Volkswagen (OTCMKTS:VWAGY) and Hyundai (OTCMKTS:HYMTF) will be forking over the $7 million fee for a 30-second spot.
But that’s not the angle I’m taking.
Instead, I’m looking for one great company from the remaining NFL cities. Preferably one that oozes hometown pride. And if it’s an NFL sponsor, that’s even better.
Here are my three Super Bowl stocks from the remaining four NFL playoff contenders.
UMB Financial (UMBF)
Before I get into UMB Financial (NASDAQ:UMBF), I just wanted to let all the San Francisco boosters out there know that I only left a Bay-area public company off my trio of picks because it would have taken forever to go through all of the stocks based in 49er land. My apologies.
For those unfamiliar with UMB, it is based in Kansas City, MO, home of the Kansas City Chiefs. It has a tie to the NFL. It was the Lead VIP Experience sponsor at the 2023 NFL Draft that took place in Kansas City from April 27 through April 29.
UMB is a financial holding company that provides banking and asset services to customers in the U.S. and elsewhere. It has three operating segments: Commercial Banking, Institutional Banking and Personal Banking.
In Q3 2023, the Commercial Banking unit generated $148.7 million in net interest income, accounting for 67% overall. The Institutional Banking and Personal Banking segments accounted for 19% and 14%, respectively. UMB’s pre-tax income in the quarter was $119.2 million, 10% higher than a year earlier.
Of the five analysts that cover UMBF stock, three rate it a Buy, with a target price of $82.50. As regional banks go, it’s mediocre.
McCormick & Co. (MKC)
McCormick & Co. (NYSE:MKC) represents the Greater Baltimore area, home of the Ravens, a good bet to make it to the Super Bowl on Feb. 11. According to the Baltimore Business Journal, the seasoning and sauce company is the third-largest Baltimore-based business by 2022 revenue.
I will forever be a fan of McCormick because of its Billy Bee honey.
“As a Canadian, I’m especially fond of its Billy Bee honey brand, which it acquired in February 2008 for $75 million. At the time of the acquisition, Billy Bee controlled 60% of the branded honey sales in Canada, with annual revenues of $37 million. I’m confident McCormick has gotten a decent return on its investment,” I wrote in Oct. 2020.
I remember my class taking a tour of its facility in Toronto, where I lived in elementary school. It’s those kinds of moments that got me hooked on business.
McCormick has grown a lot since 2008 and its Billy Bee acquisition. Its most recent purchase was in December 2020, when it acquired FONA International for $708 million, net of cash. A month before that, it bought Cholula Hot Sauce for $801 million, net of cash. Digesting the two purchases has taken the past 2-3 years.
I can’t lie; its stock’s been a major disappointment over the past five years, gaining a mere 9%. That’s one-tenth the return of the S&P 500.
Thinking the glass is half full, it’s got nowhere to go but up.
Sun Communities (SUI)
Sun Communities (NYSE:SUI) is based in Southfield, Michigan, a Detroit suburb. It is a REIT (real estate investment trust) that invests in manufactured housing (MH) and recreational vehicle (RV) communities and marinas.
It got its start in 1975 as Sundance Enterprises. 10 years later, it changed its name to Sun Communities. Eight years later, it went public in 1993, selling 5.1 million shares at $20. In 2002, its net assets went over $1 billion. Several acquisitions later — including its entry into the UK market in 2022 — it now has nearly $14 billion in investment property assets.
Its rental revenue is split three ways: manufactured housing (50%), RV (29%), and marinas (21%). It owns 298 MH communities in North America and 55 in the UK, 182 RV communities, and 135 marinas.
It generates 87% of its NOI (net operating income) from rental income. Of that, 54% is from MH communities, 24% from RV communities, and 22% from marinas. Fundamentally, there is nothing wrong with its business.
I selected it in October 2021 as one of 10 stocks to buy for the next 15 years. Despite its stock’s poor performance, I don’t think anything has changed with its business since then.
Its annual payment of $3.72 yields a reasonable 2.9%. Get paid to wait for its share price to come alive.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
