For the first time since 1990, England has made it to the World Cup semi-final. It’s an amazing achievement, and the UK is literally buzzing as a result.
England’s success is great news for the UK economy. According to data from the Centre for Retail Research (CRR), Britons have already spent over £1bn this year on the back of the World Cup and if England makes it to the final, spending could be boosted by almost £3bn, as people splash out on food, drink, new TVs and replica kits.
Naturally, many businesses are set to do very well out of England’s success at the tournament. For example, pubs operators such as Greene King should see a surge in sales, with the recent hot weather adding an extra boost. Sports stores such as JD Sports Fashion and Sports Direct could also do very well from sales of replica kits and other sports gear. Even supermarkets such as Tesco and Sainsbury’s could enjoy a boost in sales, as people load up on food and drink for World Cup parties and barbecues.
However, there’s another, less obvious stock that I think could do well out of England’s World Cup success and that’s ITV (LSE: ITV). Could the broadcaster be the best way to profit from the tournament?
Huge viewer numbers
ITV is one of the two channels that broadcast the World Cup here in the UK, along with the BBC. And like the pubs, supermarkets and sports stores, ITV is set to benefit significantly from England’s success in the tournament.
Last week, an incredible 24.4m viewers tuned into ITV to watch England’s match against Colombia, making it the biggest television event since the London Olympics closing ceremony in 2012. A further 3.3m people watched the game on the ITV hub.
Given that ITV is showing the semi-final this Wednesday (and the final on Sunday, but let’s take it one match at a time), the broadcaster is set for more huge viewer numbers this week. And that means one thing – higher advertising revenues. With over 20m Britons likely to tune into ITV for the big game against Croatia, the group will be able to charge hundreds of thousands of pounds for just a short advertisement. This could boost its bottom line considerably.
From an investment perspective, ITV offers a lot of appeal at present. The shares are cheap, trading on a forward P/E ratio of 11.8, and they also offer a high dividend yield. Last year, the group paid out 7.8p per share in dividends, meaning that the stock currently sports a trailing yield of 4.3%.
While ITV hasn’t had a great run over the last two years, it appears that sentiment towards the group is now improving. For example, last week, analysts at Société Générale gave the FTSE 100 company a double upgrade, lifting it from a ‘sell’ to a ‘buy.’ As a result, I think now could be a good time to take a closer look at the stock. Whether or not England make it to the World Cup final, I believe ITV shares have the potential to rise from here.
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Edward Sheldon owns shares in ITV, Greene King and JD Sports Fashion. The Motley Fool UK has recommended ITV and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.