The ‘New’ Game is Here

Written by GSCR Staff   
Thursday, 28 August 2014 06:58

We alluded to it earlier this week in the Guide and the Monitor, but tonight big time college football is back.

For those of you who do not follow college football at all, The Bowl Championship Series (BCS) is gone and will be replaced by the football playoffs or a ‘final four’ chosen by a committee, just like basketball, who will play for the national championship in the highest division. There is plenty of excitement and apprehension for the change, but one thing is for sure, TV ratings will remain strong and probably go up.

 

There are four main players in the stock world when it comes to college football. General Electric (NYSE- GE), which owns the NBC networks, Twenty-First Century Fox, Inc. (NASDAQ – FOX), which owns the FOX and FOX sports networks, CBS Corporation (NYSE – CBS), and The Walt Disney Company (NYSE – DIS), which owns the ESPN empire and ABC. Below is the one year chart for each company.

 

1-Year Chart for GE, FOX, CBS, DIS

(Source: Yahoo! Finance)

 

MM.08.28.14.TVCF

 

 

 

DIS had a big year, and the addition of the SEC Network will probably enhance the ESPN brand. CBS is still trying to gain traction in the sports only networks, and really putting it on the line this weekend for starters. For example, the Ohio State/Navy game is on the CBS Sports Network, not CBS. This is truly an effort to gain more subscriptions by featuring one of the most iconic brands in college football, Ohio State, along with a huge service academy following in Navy, on this network. NBC has Notre Dame Football, which may not be even close to what it used to be on the field, but still has outstanding ratings.   Finally, FOX is making a push to be on par with ABC/ESPN with prime time games on the main network, college football pregame talk shows on Saturday morning, and conference networks, like BIG and PAC12.

 

Using one of our simple favorite metrics of trailing P/E versus forward P/E, FOX looks the best here with 25 to 14 for the two metrics respectively. FOX also looks the best from a technical Daily Moving average perspective as well. If you are picking a college football stock, FOX is the winner for now. We think another 5-10% price increase is possible for the rest of 2014.

 

Now on to the serious stuff!! Who will be in the inaugural Division I football final four? It is a virtual lock that one will be the SEC champion. Who will that be? We think LSU wins this league and while defending champion Florida State also makes in to the four team tournament. Bob Stoops and the Oklahoma Sooners ended last year by beating Alabama. They continue the momentum this year and get in as well. Finally, UCLA is back and gets the nod as well. The champion is the Oklahoma Sooners.

 

Have a great day and season!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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