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AT&T Inc. (T), The Coca-Cola Co (KO), and Capital One Financial Corp. (COF) are major NCAA sponsors
The field for the NCAA Men's Basketball Tournament -- affectionately known as March Madness -- will be announced on Sunday night, with the actual on-court action tipping off on Tuesday. This is obviously an important time to the colleges and universities participating in the event, but it's also a crucial season for key NCAA sponsors, including blue chips AT&T Inc. (NYSE:T) and The Coca-Cola Co (NYSE:KO), as well as credit card issue Capital One Financial Corp. (NYSE:COF).
Advertising during the competition is big business. During last year's tournament, total television ad spending exceeded $1.1 billion. Looking more closely at the 2014 championship game between Kentucky and UConn, a typical 30-second spot cost roughly $1.5 million.
While I'd love to sit here and break down the field of likely teams that will be competing for the title, the fact is, I know next to nothing about college basketball. Plus, there are already plenty of so-called hoops experts out there. Therefore, I'll stay closer to the business side of things by sizing up the three aforementioned stocks: T, KO, and COF.
AT&T Inc. (NYSE:T)
T made headlines last week when it was announced that Apple Inc. (NASDAQ:AAPL) will take the telecom issue's place on the Dow Jones Industrial Average, effective after the close next Wednesday, March 18. This shouldn't be seen as an indictment against T, though -- the equity has advanced a respectable 3.3% since hitting a mid-December annual low of $32.07 to rest at $33.13. What's more, since bottoming out, the shares have been muscling higher atop support from their rising 60-month moving average.
Nevertheless, there's a ton of doubt surrounding T. Fifteen analysts have doled out "hold" ratings on the shares, versus seven total "buys." Also, 316.5 million shares are sold short, which would take over three weeks to buy back, at the security's typical daily trading volume. In other words, AT&T Inc. could benefit from a round of upgrades and/or short-covering activity.
The Coca-Cola Co (NYSE:KO)
KO is down nearly 4% year-to-date. Worse yet, the stock has been freefalling since hitting its most recent high of $43.66 in late February -- down 7.1% at $40.57.
Nevertheless, options traders have shown a strong preference lately for long calls over puts, per KO's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 10.49 -- which ranks in the 91st annual percentile. A capitulation among these bullish bettors could translate into headwinds for KO.
On the news front, Muhtar Kent, CEO of The Coca-Cola Co, made headlines yesterday with his decision to forego a $2.5 million bonus. The executive declined the compensation due to the company's failure to meet profit expectations last year.
Capital One Financial Corp. (NYSE:COF)
COF -- along with sector peer Citigroup Inc (NYSE:C) -- earned kudos from the Fed earlier this week, and also announced a new stock buyback plan and increased quarterly dividend. The news resulted in a 4.1% pop for the shares on Thursday -- though, at $81.45, they remain slightly in the red on a year-to-date basis.
Still, COF has a horde of fans on Wall Street. Fourteen of 19 analysts rate the stock a "buy" or better, compared to five "holds" and not a single "sell." In addition, Capital One Financial Corp.'s 50-day ISE/CBOE/PHLX call/put volume ratio of 3.32 sits just 11 percentage points from a 12-month peak. All things considered, a round of downgrades and/or a capitulation among option bulls could exacerbate selling pressure.