The Masters Portfolio: 5 Stocks to Buy

by Will Ashworth | April 10, 2014 9:29 am

The Masters Portfolio: 5 Stocks to Buy

The Masters — the unofficial opening of the golf season for most people — begins this morning in Augusta.

TheMasters185 The Masters Portfolio: 5 Stocks to BuyOnce again, the competition for the coveted green jacket is expected to be fierce. Although Tiger Woods is absent from this year’s tourney, there are a lot of good golfers capable of winning come Sunday.

In honor of this marquee tournament and the best players in golf that it attracts, I’ve put together a portfolio of five stocks to buy based on company sponsors of the odds-on favorites[1] expected to contend at the Masters this weekend.

And it looks good. If you invested an equal amount in all five of these companies at the end of 2012, by the end of 2013 you’d have achieved a total return of 39.8% — 740 basis points higher than the S&P 500. Past performance is no indication of future returns, but that’s OK — I like their future prospects, too:

The Masters Portfolio: Adam Scott, 10/1

Uniqlo185 The Masters Portfolio: 5 Stocks to BuyScott Sponsor Stock: Uniqlo/Fast Retailing (FRCOY[2])

Last year’s winner at the Masters was the first Australian ever to wear the green jacket. Adam Scott has made the cut and finished in the top 25 of all five of his starts. He’s ready to contend once more, and that’s good news for his sponsors.

The newest corporate sponsor to join the Adam Scott bandwagon is Uniqlo, the specialty retailer taking the world by storm.

Owned by Japan’s Fast Retailing (FRCOY[2]), Uniqlo signed Scott to a multiyear contract[3] just prior to his win at Augusta. Recently, the company was rumored to be buying[4] J. Crew from its private equity owners, but talks fell through.

Those who don’t want to buy FRCOY stock over-the-counter can instead gain exposure to the retailer by buying the Maxis Nikkei 225 Index ETF (NKY[5]), which tracks the performance of the Japanese market and holds FRCOY stock as its largest position with a weighting of 10.2%.

The Masters Portfolio: Rory McIlroy, 10/1

Nike185 The Masters Portfolio: 5 Stocks to BuyMcIlroy Sponsor Stock: Nike (NKE[6])

The young Irishman’s season is a mirror image of Adam Scott’s. The only difference — McIlroy has a second-place finish compared to a third-place finish for Scott, which translates into an additional $100,000 on the money list.

Otherwise, they’re identically matched heading into the Masters.

McIlroy’s big sponsorship break came in 2013 when Nike (NKE[6]) was reported to have signed the 24-year-old to a five-year, $100 million contract[7] (worth potentially as much as $250 million) to use the company’s equipment and don its apparel and footwear. While the change in equipment affected McIlroy’s play in 2013, it appears that there have been no lingering effects in 2014.

With Tiger out of the way at this year’s Masters, you can be sure that a good performance by McIlroy will gain valuable exposure for the Nike brand — and ultimately, NKE stock.

The Masters Portfolio: Phil Mickelson, 12/1

Amgen 185 The Masters Portfolio: 5 Stocks to BuyMickelson Sponsor Stock: Enbrel/Amgen (AMGN[8])

Is a fourth green jacket in the works for Phil Mickelson this weekend?

With 24 first-timers in the field at the Masters, experience is going to be in shorter supply at this year’s tournament, which plays right into the lefty’s very capable hands. Unfortunately, Mickelson is having a mediocre season by his standards, garnering no top-10s in the nine tournaments he has played so far in 2014 — and he has even missed a cut.

However, if there’s anyone that can pull it together for one tournament, it would have to be Phil.

Right there on Enbrel’s homepage[9] is Phil holding a driver. You’ve likely seen the ads where he admits to having rheumatoid arthritis, then is running around a field playing with a bunch of kids implying that the drug works for him and millions of others. This isn’t some energy drink or car brand where you question whether he actually uses it, but something necessary to keep playing golf.

For this reason, I’m putting Amgen (AMGN[8]) — the maker of Enbrel — on the list.

The Masters Portfolio: Jason Day, 14/1

toyota The Masters Portfolio: 5 Stocks to BuyDay Sponsor Stock: Lexus/Toyota (TM[10])

The Australian hasn’t played much golf on the PGA Tour so far this year, with just three tournaments entered. But He has managed to win one of those — the World Golf Championships-Accenture Match Play Championship — demonstrating that he’ll be ready for play this weekend at the Masters.

Now that Scott has won a green jacket, Day is obviously keen to win his own and he’s got the game to do it.

Lexus, owned by Toyota (TM[10]), sponsors nine golfers[11], including Day. When the Australian won the Match Play tournament in Arizona in February, his brightly colored shirt carried the Lexus logo[12] prominently on his left arm.

It’s no coincidence that Lexus sponsors golfers exclusively given the demographic of those who play the game recreationally. Golf is an expensive sport. Those who can afford to are the typical Lexus customer. Although car companies have taken it on the chin in 2014, Toyota stock makes sense in the long-term because it’s truly a global company.

The Masters Portfolio: Matt Kuchar, 18/1

RoyalBankofCanada185 The Masters Portfolio: 5 Stocks to BuyKuchar Sponsor Stock: Royal Bank of Canada (RY[13])

Of these five players, Kuchar sits the highest in the 2014 FedEx Cup standings in 15th place. Although he too has missed a cut in nine tournaments played so far, he has managed to finish in the top 10 on six occasions, leading to $1.7 million in winnings leading up to the Masters.

In last year’s tournament, Kuchar finished in a tie for eighth with Sergio Garcia and Lee Westwood. He knows how to play well at Augusta.

In addition to sponsoring Canada’s own Mike Weir, winner of the 2003 Masters, Royal Bank of Canada (RY[13]) sponsors Kuchar and nine other touring golf professionals. Although RBC is a Canadian bank it has a significant wealth management business in the US that makes its sponsorship of golfers and tournaments (RBC Heritage Classic) completely understandable from a marketing perspective. While all the Canadian banks are financially sound, RBC stands at the head of the class as Canada’s largest.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.

Endnotes:
  1. odds-on favorites: http://www.sbnation.com/golf/2014/4/7/5590154/current-masters-odds-2014
  2. FRCOY: http://studio-5.financialcontent.com/investplace/quote?Symbol=FRCOY
  3. multiyear contract: http://www.forbes.com/sites/kurtbadenhausen/2013/04/15/adam-scotts-masters-win-is-boon-for-new-sponsor-uniqlo/
  4. rumored to be buying: http://www.reuters.com/article/2014/03/18/us-jcrew-fast-retailing-idUSBREA2H23X20140318
  5. NKY: http://studio-5.financialcontent.com/investplace/quote?Symbol=NKY
  6. NKE: http://studio-5.financialcontent.com/investplace/quote?Symbol=NKE
  7. five-year, $100 million contract: http://www.nytimes.com/2013/01/15/sports/golf/rory-mcilroy-announces-deal-with-nike-golf.html
  8. AMGN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMGN
  9. Enbrel’s homepage: http://www.enbrel.com/index.jspx
  10. TM: http://studio-5.financialcontent.com/investplace/quote?Symbol=TM
  11. nine golfers: http://www.lexus.com/about/partnerships/jason_day.html
  12. Lexus logo: http://blog.lexus.co.uk/2014/02/lexus-golfer-jason-day-wins-world-golf-championship/#.U0VcMdy52bw
  13. RY: http://studio-5.financialcontent.com/investplace/quote?Symbol=RY

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