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5 Super Advertisers in the Spotlight

(KO), Best Buy (BBY), PEP's Doritos and Ford's (F) Lincoln brand all looking for spark from big game and ads

by 2/1/2013 11:02:16 AM
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So with my New England Patriots having laid an egg two weeks ago, my interest in this Sunday's big game has been reduced to the sometimes-entertaining commercials. And that got me to thinking -- do the ads have any major impact on sales/stock price/option activity? Besides the Baltimore Ravens and the San Francisco 49ers, the lineup includes soft-drink giant and Super Bowl mainstay The Coca-Cola Company (NYSE:KO), electronics/appliance retailer Best Buy Co., Inc. (NYSE:BBY), beer maker Anheuser-Busch InBev NV (ADR) (NYSE:BUD), the Lincoln brand of Ford Motor Company (NYSE:F), and the obligatory crowd-sourced ad from Doritos, owned by PepsiCo, Inc. (NYSE:PEP). Call it the Super Index (ticker: SBXLVIIwhatever). So here's look at how each is faring heading into Super Sunday:

  • BBY has seen a bit of a post-holiday bounce after hitting a multi-year low of $11.20 in late December. It has been trading at about $16.20 and above its 10- and 20-day moving averages for nearly three weeks, and is up more than 37% year-to-date. Options wise, traders are following the trends, with Schaeffer's put/call open interest ratio (SOIR) for BBY standing at 0.57, lower than 86% of all other readings in the last 12 months -- signifying more call action than normal. Could BBY's new spot -- reportedly featuring Saturday Night Live alum and recent Golden Globes Awards host Amy Poehler -- make any difference? Previous year's efforts included a sci-fi themed mash-up starring Justin Bieber and Ozzy Osbourne, as well as a promotion of its short-lived tech trade-in program.

  • KO has been a Super Bowl mainstay pretty much since the game became a big TV event. The Super Bowl has been the launching point of Coke's cuddly polar bears and the classic Mean Joe Greene spot. (This year, the company is eschewing those icons and going with a cowboy theme.) And shares of KO could certainly use a post-game lift. Trading at about $37, KO is off more than 8% from its 12-month high of $40.67 reached in late July. Options traders are fairly bullish on the stock, with the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio standing at 2.44, higher than all but 10% of similar readings over the last 12 months.

  • BUD has been in the news a lot this week, with the U.S. Justice Department (DOJ) suing to stop a proposed $20.1 billion merger with Mexican beer company Grupo Modelo SAB de CV (USA) (GPMCF) due to competitive concerns. And given the subsequent slide in BUD shares, any positive boost from the big game would be welcome (the company has traditionally gone the funny route with its usually hysterical Bud Light spots). BUD shares fell 4.3% this week after reaching a two-year high of $94.49 on Jan. 30. Even before the DOJ news, option traders were pessimistic on the stock, with the equity's ISE/CBOE/PHLX 10-day put/call volume ratio at 2.78, in the 90th percentile among all readings taken in the previous 12 months -- indicating a higher-than-normal bearish stance among short-term traders. And today, BUD got a lot of attention from analysts, with one upgrade, one downgrade and at least three price-target cuts following Thursday's news.

  • The Lincoln brand of F is using late-night host, comic, and another former Saturday Night Live standout Jimmy Fallon as its spokesman. Fallon is reportedly writing the spot and crowd-sourcing some of the material. And while the ad might loosen up Lincoln's previously stodgy image, the shares of parent Ford could use the help. Even though the Michigan car maker this week reported its 14th straight profitable quarter, bulls seeking out calls in the February and March series this week.

  • And finally, my personal favorite -- Doritos (although my waistline isn't such a fan). A $2 billion-plus brand of PEP, the tortilla chip maker has recently taken the best spots filmed by fans and put them on the biggest TV advertising stage of the year. This year, the ad with the biggest response is also getting a chance to help with the next installation of the Transformers movie series. As for parent Pepsi, PEP shares are trading a shade below $73, and have met some resistance at $74 over the past few weeks. (In fact, the stock hasn't traded north of $74 since September 2008.) But PEP is up almost 8% recently after hitting a six-month low of $67.79 on Nov. 16 of last year. Short- and longer-term options traders aren't buying it, though. The ISE/CBOE/PHLX 10-day put/call ratio stands at 1.39, in the 92nd percentile of all similar readings taken in the last 12 months, signifying a more bearish attitude. And the ISE/CBOE/PHLX 50-day put/call ratio is at 0.81, but in the 90th percentile –showing that buy-to-open put activity during the past 10 weeks is nearing its high point.
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