Bull of the Day: Manchester United (MANU)
Manchester United (MANU) is a Zacks Rank #1 (Strong Buy) operates the popular Manchester United Football Club in the United Kingdom. For those Americans not aware, this is a popular soccer team, known very well worldwide.
The ManU club is also known as the “Red Devils” and could be compared to the New York Yankees in terms of their historical success. The team competes in the English Premier League and other soccer events around Europe.
The stock has done very little over the last decade since MANU became public in 2012. As it trades at the bottom of a decade long range on Omicron fears, there is now a great opportunity to enter the stock for both short and long-term investors.
About the Company
Manchester United operates the football club, markets sponsorships, sells apparel and other licensed products. The company was founded in 1878,employs over 1,000 and is headquartered in Manchester, United Kingdom.
MANU has a market cap of $2.4 billion and has Zacks Style Scores of “A” in Growth and “B” in Value.
Football, Soccer or Fútbol?
Whatever you may call it, the sport is growing globally around the world. Even if you haven’t seeked it out, you have probably noticed English Premiere League games on Saturday and Sunday mornings on the NBC or USA networks.
These games are giving exposure to viewers who didn’t have access a decade ago. With viewers comes fans, merchandise and revenue for each club.
Q1 Earnings
Manchester Untied reported earnings back in November, seeing 56% EPS surprise to the upside. Revenues came in at £126.5M v £109.0M last year and net debt came down a tad, moving from $440.6M last year to $439.7M.
Management cited the success to the company’s resilience through the pandemic. With that, the reiterated that their top priority is “success on the pitch”.
Manchester United Ltd. Price and EPS Surprise
Manchester United Ltd. price-eps-surprise | Manchester United Ltd. Quote
Estimates
Estimates are mixed going froward. Analysts are hiking numbers for the current quarter, but keeping them flat for next quarter. However, we see improvement into next year, with estimates going from negative $0.12 to a positive $0.01.
No doubt the recent resurgence of cases with the Omicron variant has scared investors. There have been some cancelled games where players have tested positive, which has hurt the stock.
However, England has announced they will not be shutting down the country. Investors need to understand that this is not 2020 and the games will be played.
The Technicals
The sell off due to the variant has created a great opportunity for both short and long-term investors.
Looking at the chart since 2020, the $14 level has held and bounced five times now. The stock has moved to $16 each of those times and we saw a bounce to $20 twice. That’s gain of 40% that happened twice in 2021 alone. So traders should be buying this $14 level and looking for a sixth bounce.
Long-term, we are looking at that support level to set up for a multi-year hold. The bulls will need to take back the $18 level and then finally break that $20 level that was sold twice this year. If that can happen, we could see $25 and the 2019 high of $27.70.
Bottom Line
If we can get past Omicron and normalize later in the year, MANU is poised to have strong demand for its brands. Whether its sponsors, merchandise or actually fans in the stands, MANU stands to benefit from the end of COVID.
Traders have a great setup off the $14 support level. And long-term investors have a chance to buy low into a top brand in a growing global sport.
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