Why bet on the horses when you can play the stock trades behind the 2010 Kentucky Derby? Higher reward received-to-risk assumed. There are 20 horses competing in the main event and a variety of unpredictable outcomes. However, here are a few major companies benefiting from the Derby awareness that are bound to see stock price action:
1) Brown-Forman (NYSE:BF-B)
The official drink of the 2010 Kentucky Derby is the Mint Julep. The whiskey most commonly used when making mint juleps is Early Times Kentucky Whiskey, a brand owned by Brown Forman. Did you know that Early Times Whiskey was first distilled in 1860? 150 years later, the brand is now a catalyst come Derby time for Brown-Forman.
BF-B: $58.76 per share
BF-B Fundamentals
Market Cap: $8.63 Billion
Forward P/E: 17.75
Trailing P/E: 19.23
Revenue: $16.44 per share
Cash: $1.65 per share
Dividend: 2.1% annually
On a technical basis, BF-B recently tested the 200-day moving average on a 1-year chart of $57 as support. If price support holds at current levels, then buyers could continue to lift the price. The uptrend is still in tact, but be cautious of the tiring $60 level which has not been clearly taken out yet.
2) General Electric (NYSE:GE)
NBC is the exclusive television broadcasting host of the Kentucky Derby. General Electric owns an 80% stake in NBC, with Vivendi owning the other 20%.
GE: $19.49 per share
GE Fundamentals
Market Cap: $208 Billion
Forward P/E: 15.11
Trailing P/E: 21.14
Revenue: $14.54 per share
Cash: $10.42 per share
Dividend: 2.1% annually
On a technical basis, GE is well above its 200-day moving average on a 1-year chart of $17.75. It is evident there is consolidation/exhaustion occurring at current price levels. Even though the 200-day moving average is rising, you could see a pull back to test the line as history is our witness.
3) Yum! Brands (NYSE:YUM)
YUM is under a 5-year contract for the right to be the Presenting Sponsor of the Kentucky Derby
YUM: $42.77 per share
YUM Fundamentals
Market Cap: $20 Billion
Forward P/E: 15.34
Trailing P/E: 18.94
Revenue: $23.18 per share
Cash: $.95 per share
Dividend: 2% annually
On a technical basis, YUM is trading far off its 200-day moving average on a 1-year chard of $38.40. Since March of this year, the stock is up over a whopping $10. Look for a possible cooling effect here.
For just a few minutes of adrenaline on Saturday, preparation will meet opportunity for jockeys, trainers and the horses. If you’re bets don’t win, just know that you can fall back on trading in the markets where setups are easier to control (i.e. lower risk of sloppy conditions) and YOU are the educated jockey of your own trades!
Disclosure: No positions in the companies mentioned.
Derek Hoffman is the CEO & Co-Founder of Wall St. Cheat Sheet. To read more of his investing insights, visit Wall St. Cheat Sheet
To get entry points, stop-loss points, and profit targets for my Watch List stocks and Featured Trade, simply try a 14-day complimentary trial by visiting here: Wall St. Cheat Sheet Premium
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