Now that we’re passed the Super Bowl and on the cusp of March Madness, it might be a good time for you to consider the stock market. While sports and stocks might not seem like a match, avid sports fans have good reason to consider investing in these companies. Sports in the United States is big business, and the popularity of sports in America has led to big profits for some of the country’s biggest companies. If you’re an avid sports fan and an avid investor to boot, you’d be wise to consider these stocks the next time you watch your favorite team.
Three titans of sports broadcasting
Football is America’s most popular sport, and CBS dominates football broadcasting. CBS broadcasts weekly NFL regular season games, as well as AFC regular-season, post-season divisional playoff and championship games. CBS Sports has rights to broadcast the AFC through the 2013 season, including the broadcast of the 2013 Super Bowl. A positive development for CBS Corporation (NYSE:CBS) came in December 2011, when CBS wisely extended its rights with the NFL to broadcast the AFC from the 2014 season through the 2022 season, including certain National Football Conference regular season games and the Super Bowls in 2016, 2019, and 2022.
The Walt Disney Company (NYSE:DIS) is a media conglomerate, with a market capitalization of $90 billion and a wide array of sports networks, including ESPN and ABC. Disney reported solid group 2012 results, with sales increasing 3% year over year on the strength of its Media Network segment, which saw sales increase by only 4%.
The Walt Disney Company (NYSE:DIS) also got off to a strong start to the new year, reporting that fiscal first quarter revenue rose 5% versus the same quarter a year ago. Strength was particularly noticeable within the Media Networks segment, which contains the popular ABC and ESPN networks and saw 7% revenue growth year over year.
Time Warner Inc (NYSE:TWX) is a $50 billion company that also benefits handsomely from America’s love affair with sports, and the company depends heavily on its television networks. The Network segment is the most important one for Time Warner’s future.
Television networks represent more than two-thirds of Time Warner Inc (NYSE:TWX)’s profits. Therefore, continued development of successful TV programming is critical for the company. Management is optimistic here, pointing to the newly arranged 14-year contract with CBS Corporation (NYSE:CBS) and the NCAA to broadcast the Division I Men’s Basketball Tournament, one of the most highly watched sporting events in the United States.
A more speculative play to consider
If you’re an investor interested in more highly volatile, speculative stocks, you might want to consider the The Madison Square Garden Co (NASDAQ:MSG). The company carries a market capitalization of only $4 billion and holds a valuation befitting a high-growth stock, with a trailing P/E of over 30 times.
Buying this stock provides exposure to both broadcasting and sports teams themselves. By investing in Madison Square Garden Co (NASDAQ:MSG), you’re pinning your hopes largely on the New York Knicks, New York Rangers, and New York Liberty. MSG also operates the MSG Networks. In February, the company reported fiscal second-quarter revenue rose 4% year over year.
The Foolish takeaway
Disney, CBS Corporation (NYSE:CBS), and Time Warner Inc (NYSE:TWX) are stocks that are modestly priced, with trailing price-to-earnings ratios of less than 19 and dividend yields ranging from 1% to 2.25% annually. They offer an attractive combination of modest valuations, dividend income, and solid growth rates that should be attractive for value and income investors alike.
Purely growth-oriented investors may prefer Madison Square Garden Co (NASDAQ:MSG), since it has more room to run due to a much smaller market cap. Each of these companies profit handsomely from each of America’s beloved sports, including football, basketball, and hockey. Investors in these stocks should take comfort from the fact that America’s love affair with sports isn’t likely to end any time soon.
The article Stocks for Sports Fans originally appeared on Fool.com.
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