The Big Dance is just around corner. I’m talking about March Madness, of course. The winner-take-all, single-elimination tournament to decide the champion of the 2019 NCAA Men’s Basketball season. Millions of viewers. Sixty eight teams. Dozens of venues. Six rounds. One winner.
Some call it the most exciting times of the year for sports fans. It may be. But the fact that the stock market tends to perform really well during March Madness isn’t up for debate. Stocks often tend to rise during the March Madness tournament, which spans throughout all of March and spills into April. They also tend to rise during that stretch by more than any other stretch during the year.
Maybe it’s just a coincidence. Maybe not. But, there are unarguably a handful of March Madness stocks which do directly benefit in a big way from the Big Dance.
Which stocks fall under that umbrella? Let’s take a look at seven March Madness stocks to track as the Big Dance plays out in March and April.
March Madness Stocks to Watch: Nike (NKE)
Of all March Madness stocks, the one to watch most is Nike (NYSE:NKE).
The athletic apparel giant has its fingertips all over the Big Dance. Nike consistently outfits somewhere north of 40 of the 68 teams that play in March Madness, representing about 60% of the tournament’s participants. That means that six out of every 10 jerseys, shoes, warm-ups and more in March Madness sports a Swoosh or Jumpman logo. So, for the millions of viewers who tune into March Madness every year, the Nike brand is everywhere. It also helps that this year’s top four teams (Gonzaga, Virginia, Duke and Kentucky) are all Nike schools.
Of course, this is huge for Nike basketball mind-share. That’s big for Nike’s entire business. Nike dominates the basketball market, and this dominance is a big driver behind Nike’s nearly $40 billion revenue base. As such, continued dominance in basketball will keep Nike atop the entire the athletic apparel market.
Although Nike is king in the basketball market, Adidas (OTCMKTS:ADDYY) is gradually making moves in this market which are becoming increasingly apparent during March Madness.
In 2015, Adidas outfitted just 11 of the 68 teams in March Madness. In 2017, Adidas outfitted 15 of the teams. This year, that number could very well be higher. Importantly, one of the nation’s top teams — Kansas — is an Adidas school.
As is the case for Nike, basketball is a huge market for Adidas, and a healthy presence in the Big Dance is a net positive for Adidas basketball mind-share. The benefits here are smaller than they are over at Nike, given smaller overall presence. But, if an Adidas team makes some serious noise in the Big Dance (like Kansas), then that could be a huge medium to long term win for ADDYY stock.
Under Armour (UAA)
When it comes March Madness stocks and athletic apparel brands, Nike is king, Adidas is a solid second place and Under Armour (NYSE:UAA) is the dark horse with a lot of potential.
Back in 2015, Under Armour outfitted just six of the 68 teams in the Dance. In 2017, that number doubled to 12. This year, that number could be even bigger. Texas Tech, an Under Armour school, has a fringe-top-10 basketball team this year. Meanwhile, both Maryland and Wisconsin — also Under Armour schools — are top 20 teams, and Cincinnati is a top 25 team. Thus, Under Armour has four teams this year which could make some serious noise in March.
If any of them do, that could be big for UAA stock. Under Armour has struggled in the basketball market ever since early red-hot success with NBA superstar Steph Curry faded. Surprise college basketball success in the 2019 Dance could reinvigorate the now-stalled-out Under Armour basketball growth trajectory. If it does, that could create sizable tailwinds for UAA stock.
Any discussion of March Madness stocks would be incomplete without CBS (NYSE:CBS), the network which hosts a healthy portion of the Dance’s 63 nationally televised games, including the most watched ones.
March Madness coverage averages millions of viewers per game, and most data indicates that those numbers are only going up. A healthy majority of those games air on CBS. Moreover, viewership goes up as the tournament narrows down, and some numbers point to the final games in the Big Dance averaging 15 million-plus viewers. All those final games are televised through CBS.
As such, CBS has a lot to gain through ad revenue and partnerships during March Madness. There’s reason to believe this year will have unusually large March Madness viewership, given the plethora of young talent across college basketball this year, the extreme level of parity among the teams, and the enormous hype surrounding college basketball’s best player, Zion Williamson. If March Madness does score unusually large viewership ratings this year, the biggest winner will be CBS stock.
There are 63 nationally televised games in March Madness. CBS doesn’t air all of them. In fact, a majority of the tournament’s early games are aired by Turner Sports, which is owned by AT&T (NYSE:T).
Through TBS, TNT and truTV, Turner Sports actually airs a majority of March Madness games in the first and second rounds, as well as half the games in the Sweet 16 and Elite 8. To be sure, those games average less viewers than the Final Four and Championship Game. Nonetheless, they still average millions of viewers per game, and represent a sizable ad revenue opportunity for AT&T.
As stated earlier, this year’s Dance could have unusually large viewership due to various factors, one of which is an unusually large amount of parity among this year’s field of teams. Higher parity usually lends itself to closer early round games, and also more upsets. That usually lends itself to higher viewership in the earlier rounds. As such, AT&T could actually be a big March Madness winner this year.
One company that consistently has its finger tips all over March Madness is Coca-Cola (NYSE:KO).
The beverage giant is one of the Dance’s official NCAA Corporate Champions, and that means that Coca-Cola TV ads and in-arena ads will be all over the place during March Madness. That’s a win for mind-share. It’s also worth noting that Coca-Cola owns Powerade, the sports drink brand which is typically front-and-center during the entire March Madness tournament.
This year is especially important for Coca-Cola. The company is under intense pressure regarding the health of some of its core drinks, including the staple Coca-Cola carbonated beverage. Thus, it has an opportunity this year to reduce that pressure via effective March Madness marketing. If they do, sales in North America could get a nice lift, and that could power gains in KO stock for the rest of the year.
Domino’s Pizza (DPZ)
Last on this list of March Madness stocks to watch is Domino’s Pizza (NYSE:DPZ).
The argument here may be less straightforward than with other March Madness stocks. Nonetheless, it’s just as potent. The mainstream emergence of the at-home economy and streaming apps presumably means that consumers are increasingly watching March Madness from their own homes, and not at sports bars. Yet, March Madness viewing is often a multihour affair, during which food is a quasi-necessity. When it comes to March Madness food, distraction-free and easy-to-consume finger food is best, and in that category, Domino’s reigns supreme.
Thus, the at-home economy shift will provide a nice tailwind for Domino’s this March Madness season, as order volume will likely surge thanks to an increase in the number of at-home viewers. That tailwind will provide a nice lift to the numbers, and give DPZ stock a nice boost the next time the company reports earnings.
As of this writing, Luke Lango was long NKE, T and DPZ.