World Cup 2018: which companies will be the big winners?
As FIFA's month-long World Cup football extravaganza draws tantalisingly close, analysts have highlighted sectors that should score stronger profits, including airlines, sports retailers and bookmakers.
With three million tickets sold and 32 countries participating in the tournament, fans are expected to travel to Russia in droves, with International Airlines Group and its subsidiaries British Airways and Iberia expected to be a “popular choice” for fans.
Sporting brands also frequently benefit from major tournaments due to fans purchasing the shirts of favourite teams and players, together with an upsurge in people taking up the sport.
Joshua Mahony, market analyst at IG, said: “One of the regular talking points around the tournament is over which sports shirt manufacturer will come out on top, with Nike hoping that the likes of Brazil, France, and England do well, while Adidas will be hoping Spain, Germany, or Argentina could provide a boost to sales in the event that one of their big teams win the tournament.”
Retailers are already promoting replica kits on their websites, with the success of Nike's new Nigeria kit resulting in queues round the block at its Oxford Street store. "It will be interesting to see whether Sports Direct or JD Sports will win the battle," said Richard Hunter at broker Interactive Investor.
The also pointed to the "added froth" of advertising during large sporting events being seen a positive for the likes of WPP.
Hargreaves Lansdown's Laith Khalaf pointed out that ITV should similarly gain, suggested its combined offering of World Cup matches and a new season of 'Love Island' gives the company a “significant platform” to sell against TV advertising.
“With a market cap just shy of £7bn, at some point ITV may look like an attractive bolt on for one of the big global media companies,” he said.
After highs and lows for the gambling industry over the last few months, including the government lowering the maximum stake on fixed odds betting machines and the prospect of legalised US sports betting, the fate of UK bookmakers’ World Cup is intertwined with that of the England team. Ladbrokes owner GVC Holdings, William Hill and Paddy Power Betfair
If the England team progress well into the tournament then punters will be more likely to bet with their “hearts rather than their heads,” according to Khalaf.
Domino’s has a pizza the action in World Cup nations including Iceland, Sweden, Switzerland and Germany, as well as a thriving business in the UK, so the fast food joint is expected to lead to strong cash flows that can support dividend payments.
Over at online takeaway food website Just Eat, there are established operations in the UK, Denmark, France and Switzerland, up-and-coming operations in Spain and Mexico, and has a 32% stake in Brazilian takeaway service iFood. The company faces increasing competition from rivals Deliveroo and Uber Eats but is still achieving commendable growth and recently was promoted to the FTSE 100.
Pub groups such as Marston’s and Greene King are likely to reap rewards as eager fans expected to pile in in support of their respective teams, while Guinness and Smirnoff maker Diageo and bottler Coca-Cola HBC are also expected to enjoy and extra fizz.
While some food and drink firms are set to benefit, IG's Mahoney noted that there would likely be a decrease in demand for other evening activities such as nightclubs, cinemas, and restaurants, temporarily hitting the likes of Cineworld, Hollywood Bowl and Restaurant Group.
“With more time spent in front of a screen, there is also likely to be a drop in the purchase of home improvement products and home furnishings,” said Mahoney.
Mike van Dulken at Accendo Markets said some supermarkets could get an extra boost, with the three-to-five hour time difference with Russia and quite a few matches early in the afternoon, some people may watch at work and stock up from Tesco, Sainsbury's, Morrison's and Ocado.
He suggested one overlooked factor could be that now that 4G mobile phone data is more reliable, use of ubiquitous smartphones could benefit the likes of BT, Vodafone, Dixons Carphone are people buying extra data to stream live on their handsets.
Analysts also emphasised caution, with Khalaf urging investors to “do their homework and factor in the wider issues”.
“There are definitely some businesses which can expect a short term boost from the World Cup, but in the grand scheme of things this isn’t in isolation a reason to invest. Investors will still be left holding any stocks they have purchased once the World Cup has been and gone, so it’s important to consider the long term prospects of a company before backing it,” he said.