Game Day Gainers: 3 Food & Beverage Stocks Primed for a Super Bowl Boost
We are just days from Super Bowl 58. More than 50 advertisers will be in this year’s big game, with a 30-second commercial costing approximately $7 million. Super Bowl stocks don’t spend this money if management isn’t convinced the payback will be greater than the investment.
Over the years, sports and non-sports fans have sat down to watch the big game, many just to see the commercials. Ironically, the ads have become so popular that some get released before Super Bowl Sunday.
Thank goodness for that.
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I live in Canada. Due to broadcasting rights here, we don’t see all of the great ads from each Super Bowl. That’s a shame. There are some good ones.
As you watch this year’s game, consider the companies buying ads. Are their business models worth investing in?
Because I won’t get to see all of the ads on Super Bowl Sunday, I’m focusing my three food and beverage stocks primed for a Super Bowl boost on the ones confirmed to be running an ad on the biggest football day of the year.
Go Chiefs!
Mondelez International (MDLZ)
Source: Shutterstock
This year’s Super Bowl has a decidedly sweet flavor to it. Mondelez International (NASDAQ:MDLZ) is one of the many candy presenters in Super Bowl 58. Enlisting the help of Kris Jenner, it will air its Oreo ad in the second quarter of the big game. Entitled “Twist on It,” it details how twisting became the way to eat an Oreo.
Of course, Oreo is one of the better-known products in its stable of brands, but there are 240 that generate revenue for the company. However, Oreo and five others generated more than $1 billion or more in annual sales.
It is incredibly dominant in the biscuit category, which includes Oreo. In 2022, it captured about 16% of the global biscuit market, more than 4x Campbell Soup (NYSE:CPB), the second highest by market share.
In 2012, its core categories of chocolates, biscuits, and baked snacks accounted for 59% of its revenue. In 2022, that had increased to 80%. Its goal is to get this percentage to 90% through organic growth and M&A.
Since 2018, it’s made nine acquisitions for approximately $3 billion, adding more than $2.8 billion in annual revenue. Through this combination, it plans to outgrow its peers, leading to above-average total shareholder return (TSR). In the four years between 2018 and 2022, it generated a TSR of 16.1%, more than 480 basis points than its peers.
Yielding 2.3%, get paid to enjoy its future growth.
Nestlé (NSRGY)
Source: Ken Wolter / Shutterstock
The Drumstick brand will appear in Super Bowl 58. It is the ice cream brand’s first ad in the big game. Starring comedian and actor Eric André, the 30-second ad begins Drumstick’s campaign to make the day after the big game a holiday.
“This Drumstick partnership is extra cool because not only do they have this awesome commercial (starring yours truly), but they’re encouraging fans to sign a petition to make the day after the game a national holiday for some unexpected, wacky fun — coining it #DrumstickMonday,” André told People magazine.
Nestlé (OTCMKTS:NSRGY) acquired the Drumstick brand in 1991. However, the brand’s ownership gets tricky once we hit the 21st century. In 2016, Nestlé merged its European ice cream business with R&R Ice Cream, a Paris-based private equity firm PAI Partners portfolio company. In 2020, Froneri acquired Nestlé’s U.S. ice cream business for $4 billion. Nestlé continues to own and manage its remaining ice cream businesses in Canada, Latin America and Asia.
Despite the sale of its U.S. business, the company’s milk products and ice cream segment still generates 12% of its global revenue, so the Drumstick ad will do wonders for the brand in the markets where it still has ownership.
Long-term, you can’t go wrong with Nestlé.
Hershey (HSY)
Source: George Sheldon / Shutterstock.com
Hershey’s (NYSE:HSY) Reese’s brand returns to the Super Bowl ad carousel after four years on the sidelines.
“Reese’s has a fervent fan base who are as emotionally invested in our iconic pairing of peanut butter and chocolate, much like the fan bases of the two teams in the Big Game,” said Ryan Riess, Vice President of Creative & Brand Strategy at The Hershey Company.
It last appeared in 2020 when it launched the Reese’s Take 5 bar. This year, the company is teasing that the ad will bring a “Big Change” to Reese’s peanut butter cups. Hershey didn’t release any details about the potential changes in store. I guess Americans will just have to watch and see.
Hershey is my favorite of the three names on this list.
In a case of silliness, CNN Business reported in early January that a woman from Florida was suing the company because its Reese’s Peanut Butter Pumpkins product did not come with a cute pumpkin face as detailed on the candy’s outer wrapper.
“Kelly ‘would not have purchased the Reese’s Peanut Butter Pumpkins product if she knew that it did not have the detailed carvings of the mouth and/or eyes as pictured on the product label,’ the lawsuit says,” CNN Business reported.
“The lawsuit, filed in federal court in Florida, seeks class-action status on behalf of “numerous consumers [who] have been tricked and misled by the pictures on the Products’ packaging.”
That woman has way too much time on her hands.
Trading near its lowest point since January 2022, buying below $200 should provide a good return on your investment over the next 3-5 years.
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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
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