2 Share Tips For Olympic Gold

Published in Investing on 15 June 2012

Which companies could emerge as winners at the Olympic Games?

In 2007, the government agreed a £9.3bn budget for the London 2012 Olympics. Rather surprisingly, they've just announced that they are now "increasingly certain" of delivering the Games for less than £9bn -- considerably under budget.

So where has that £9bn been spent and which companies have benefited the most? What's more, who will benefit from the consumer expenditure generated by the Games?

A search through the last year's company announcements using keywords like 'London 2012' reveals that all sorts of companies are making vague claims of expected trading improvements during the Olympic period -- but who will really see enough of a boost to affect their bottom line and, more importantly, won't experience a corresponding downturn afterwards?

On your marks!

I've listed some of the companies with a reasonable claim to an Olympic boost below. They range from FTSE 100 giants to AIM-listed tiddlers, so the impact of the Olympics on each company could vary widely.

One of the biggest companies listed below is a rare UK investment for the world's third-richest man, billionaire investor Warren Buffett. Earlier this year, he increased his holding in this company to more than 5% and I'm very happy to hold it in my portfolio, too. If you'd like to find out the name of the company, the price Buffett paid and what its big attractions are, then download this free Fool report.

Get set!

Believe it or not, I've whittled this longish list down from a much longer list of possible contenders. At the end, I've selected two of the companies listed below as possible gold medal winners for Olympic investors -- based not only on their Olympic prospects but also on wider operations.

SectorCompanies
Food & Drug RetailersTesco (LSE: TSCO), Sainsbury (LSE: SBRY), Wm Morrison Supermarkets (LSE: MRW) -- all expected to benefit from a temporary lift in Sunday trading restrictions. Elsewhere, you have Sports Direct International (LSE: SPD), JJB Sports (LSE: JJB) and Greggs (LSE: GRG).
MediaOverpaid advertising giant WPP (LSE: WPP) and talkSPORT radio operator UTV Media (LSE: UTV) both expect a surge in advertising revenues.
Support ServicesG4S (LSE: GFS) has a contentious £283m deal to provide security at the Games. Serco (LSE: SRP, Aggreko (LSE: AGK) and Atkins (ASK) also expect benefits.
TelecomsVodafone (LSE: VOD) and BT Group (LSE: BT-A) should see a short-term lift. AIM minnow Pinnacle Technology Group (LSE: PINN) has an important contract to provide telecoms services to overseas broadcasters at the Games.
Construction & MaterialsBalfour Beatty (LSE: BBY) has both pre- and post-Games contracts.
Travel & Leisure, Leisure GoodsLast year, Greene King (LSE: GNK) acquired Capital Pubs, giving it a total of 250 pubs within Greater London. Passenger numbers should rise for transport operators Go-Ahead (LSE: GOG) and FirstGroup (LSE: FGP), while First is also providing additional spectator services. Finally, collectables manufacturer Hornby (LSE: HRN) expects sales of its London 2012 merchandise to make a strong contribution to its profits.

Go!

My own two tips for Olympic glory are Balfour Beatty and Pinnacle Technology Group, but if you'd like some tips from the Fool's in-house team of analysts, I'd recommend this report, "Top Sectors of 2012". It covers three key sectors with several specific tips for each.

1) Balfour Beatty

Infrastructure specialist Balfour Beatty constructed the Aquatics Centre for the games and recently announced a £50m, 10-year deal to run the Queen Elizabeth Olympic Park after the Games.

As my Foolish colleague Tony Luckett highlighted back in January, Balfour Beatty increased its dividend every year through the recession and currently trades on a price-to-earnings ratio of only 7.9, with a handsome dividend yield of 4.9%. Adding icing to an already attractive cake, it announced a £300m Highways Agency contract yesterday.

2) Pinnacle Technology Group

My second tip is a micro-cap punt that is growing strongly and I believe could be approaching a breakthrough into profitability. As I mentioned above, Pinnacle Technology Group is providing a range of telecoms services to BBC International at the Games, a role it also performed at the Royal Wedding last year.

Behind this lies substantial growth -- its customer base has grown by 250% over the last year and it recently reported Q1 revenues up 175% on the same period last year. Currently trading at 0.33p per share, it might be worth a look if you're a small cap investor.

Want to learn more about shares, but not sure where to start? Download our latest guide -- "What Every New Investor Needs To Know" -- it's free. The Motley Fool is helping Britain invest. Better.

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> Roland owns shares in Vodafone and Tesco but does not own any of the other shares mentioned in this article. The Motley Fool owns shares in Tesco.

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Comments

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UncleEbenezer 15 Jun 2012 , 3:05pm

Surely whatever benefits the likes of BBY may reap have already happened?

The real beneficiaries this summer should be those who support mass participation. Companies that'll deliver a pizza and a crate of beer to the home should top the pile.

theRealGrinch 15 Jun 2012 , 10:06pm

can someone remind me of when Londoners had the vote on staging this junket?

food and beverage companies the obvious choice here. there rest is priced in long ago.

ANuvver 16 Jun 2012 , 6:50pm

Oh, I am grinching in harmonious sympathy.

Apparently, so I'm told, trying to be better than others at running, jumping and wrestling is de facto a good thing for society, so is watching it and paying through the nose to host it.

Brace also, for everyone suddenly becoming overnight experts on "the emergence from the wilderness years of Kazakh netball"...

As a Londoner, I neither wanted nor saw the need for or the economic value in this disgraceful profligate "pizza, beer and circuses" vanity project. I'm not for a moment suggesting that it was a major factor, but can't help looking at the current state of the last nation to win the honour of staging this ludicrous jamboree of outmoded, irrelevant Corinthian piffle...

Still, East London is a perfect locale - lots of mind and performance altering substances easily available.

ANuvver 16 Jun 2012 , 7:20pm

Further -

I suppose if we could engage enough of our disaffected youth in putting in hours of training to perfect their Fosbury Flop, it might mean they'd be too knackered to go out flash-looting when the weather improves. Of course, it might just mean warehouses will need taller fences.

"Sportswear", for goodness' sake. If I have to listen to another waddling pissed-up berk, resplendent in latest strip and state-of-the-art running shoes, banging on about the relative merits of rushing in the sweeper system when he'd plainly herniate himself by attempting a short throw-in...

richjfool 17 Jun 2012 , 6:55am

I would think that GFS and others have been riding on the back of Olympic prospects for the last 9 months or so, and maybe now is the time to start taking profits.

I would also have included Compass in the (article's) list.

sopavest 18 Jun 2012 , 8:27am

UncleEbenezer, TheRealGrinch,

I'm not sure about food/drink companies. Even if they get a short-term boost during the games, I'm not sure there will be any residual benefit afterwards. I'm not even sure how much mass participation there is in the Olympics. Most people I know would not make a pre-scheduled decision to watch a particular Olympic event, unlike say football or motorsport.

Ditto for pubs, the Olympics isn't like football and I don't think people go to the pub to watch athletics.

On the other hand, BBY isn't expensive and will continue to benefit from profitable government contracts. Similarly, I think PINN has real growth potential (with micro cap risk).

But we're all allowed to disagree!

Regards,

Roland (article author)

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