Sport betting represents over 30% of the global gambling market and its share increases during major sporting events, such as the upcoming World Cup 2018. Betting is highly risky and even though the winnings can be very high there aren’t many successful stories of people that built their fortunes or managed to provide a comfortable lifestyle for themselves through sports betting. We believe that a much better capital allocation would be to invest in companies that will not only see higher sales in the short-run due to the World Cup, but might also do well over the long run. In the first part of this two-article series we covered three stocks to buy ahead of the World Cup 2018, Adidas AG (ADR) (OTCMKTS:ADDYY), Comcast Corporation (NASDAQ:CMCSA), and Domino’s Pizza, Inc. (NYSE:DPZ) and in this article we will discuss five other companies that have a big exposure to the event.
In addition to enjoying higher short-term returns from their exposure to the World Cup 2018, the companies that we are going to discuss also see strong support from smart money investors. Our research has shown that the hedge fund sentiment is a metric that should definitely be taken into account when identifying the best stocks to invest in, since hedge funds conduct a detailed analysis of each company they invest in and focusing on their collective picks provides investors with an edge that can beat the market.
Based on this research and backtesting, Insider Monkey has developed a strategy that focuses on the most popular stocks among best-performing hedge funds and it has returned over 74% since May 2014, outperforming the S&P 500 ETF (SPY) by over 20 percentage points. We share the picks from our strategy in our premium newsletters that can be accessed free of charge for 14 days.
While in the US, soccer is not the most popular sport (it ranks fourth after American Football, Baseball, and Basketball) and with the US not qualifying to go to Russia, where the World Cup 2018 will take place between June 14 and July 15, it’s a big deal in most other countries, in some of which it represents part of the culture. Like with many spectator sporting events, the main staple drink associated with soccer is beer, therefore you can’t go amiss with Anheuser Busch Inbev NV (ADR) (NYSE:BUD), the largest beer company in the world. Anheuser Busch Inbev NV (ADR) (NYSE:BUD) is also one of long-time sponsors of the World Cup and has secured its commitment towards the World Cup 2018, as well as the one in 2022 that will take place in Qatar. Recently, Anheuser Busch Inbev NV (ADR) (NYSE:BUD) launched its “Light Up the FIFA World Cup” campaign that includes global advertising and dispatching over eight million high-tech red cups that will light up in response to fans cheering.
Anheuser Busch Inbev NV (ADR) (NYSE:BUD) also owns a large portfolio of beer brands in many countries across the world, including Budweiser, which is the best-selling beer in the world and the official beer of the World Cup 2018 and Stella Artois, which is the best selling beer in Europe. Among the hedge funds tracked by Insider Monkey, 27 funds amassed nearly $7.0 billion worth of Anheuser Busch Inbev NV (ADR) (NYSE:BUD)’s stock heading into 2018.
On the next page, we will discuss four other stocks to invest in to get exposure to the World Cup 2018.
While The Coca-Cola Co (NYSE:KO) is the official sponsor of World Cup, we believe that PepsiCo, Inc. (NASDAQ:PEP) might benefit more from the event due to one simple reason: snacks. While beer is the staple drink at the World Cup, chips are the staple snacks that usually go hand-in-hand with beer. In its last quarterly report, PepsiCo, Inc. (NASDAQ:PEP) posted better-than-expected profits and revenues and while its drinks segment is struggling, the sales of the Frito-Lay chips and snacks was the main revenue growth driver. As consumers become more health-aware and switch away from sugar-filled sodas, PepsiCo, Inc. (NASDAQ:PEP) has been focusing on its snack business and even introduced healthier versions of its most popular snack brands.
The changes that PepsiCo, Inc. (NASDAQ:PEP) has made regarding its strategy did not go unnoticed among hedge funds, as PepsiCo has managed to outrank The Coca Cola Co (NYSE:KO) as the more popular choice. At the end of 2017, there were 49 funds holding shares of PepsiCo, Inc. (NASDAQ:PEP), versus 46 funds long The Coca Cola Co (NYSE:KO). By comparison, three years ago, at the end of the second quarter of 2015, 62 funds were bullish on Coca Cola and 57 investors held shares of PepsiCo.
Then there’s Yandex NV (NASDAQ:YNDX), the company that operates the largest search engine in Russia and a number of other businesses. Commonly known as the “Russian Google”, Yandex is the second most-popular European stock among hedge funds due to its leading position on the Russian search market. During the World Cup 2018, Yandex will cater to the crowds of travelers by providing services such as Yandex Maps and Yandex Flights, as well as Yandex Taxi, which is the largest online taxi booking service in the country, covering 108 cities. During the fourth quarter, Yandex Taxi saw the number of rides surge by 250% and with 1.50 million people expected to visit Russia during the World Cup, there will most likely be a further bump in rides growth. Earlier this year, Yandex Taxi acquired Uber’s operations in Russia and neighboring countries and Yandex NV (NASDAQ:YNDX) expects the division to propel its consolidated revenue growth to between 25% and 30% this year.
Manchester United PLC (NYSE:MANU) gets exposure to the World Cup through its main assets: its players. Most players will play for England, which is currently an underdog with odds of 16/1 to win (probability of around 6%), but some “Red Devils” will also be part of other national teams, including Spain and France, which are among the favorites to win the competition (alongside Germany and Brazil). Manchester United PLC (NYSE:MANU) saw just eight funds tracked by Insider Monkey long its stock at the end of 2017.
Last but not least, we should mention William Hill plc (LON:WMH), which is one of the best igaming companies to invest in, and which saw revenue of $2.38 billion last year, up by 7% compared to 2016. William Hill plc (LON:WMH) has both online and retail segments, with retail including over 2,300 licensed betting offices in the UK (out of 8,500 in operation). William Hill plc (LON:WMH) served over 2.40 million customers in the UK, Italy and Spain last year. William Hill plc (LON:WMH), which also has ADRs traded on the Over-the-Counter market in the US, is one of the best ways to benefit from sport betting, without having to actually risk money by betting on teams at the World Cup.