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Stanley Cup Fever: 3 Stocks to Buy as Hockey Heats Up

The Stanley Cup final between the Florida Panthers and Edmonton Oilers began June 8. It’s only appropriate, then, that I consider three hockey stocks to buy to celebrate the occasion.

A Canadian team hasn’t won the Cup since 1993 when the Montreal Canadiens beat the Los Angeles Kings in five games. The last time a Canadian team played in the Stanley Cup final was the Montreal Canadiens in 2021. These are both disheartening for this Canadian.

Maybe this year, the Oilers will break through, ending the 31-year drought.

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In the meantime, I’ve got a job to do: Select three hockey stocks to buy for the long haul. A hockey stock, for the purposes of this article, are companies related to the NHL, either as sponsors or benefiting in some way from pro hockey.

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In addition to the above criteria, I’ll also try to restrict my picks to stocks in the S&P 500.

PepsiCo (PEP)

Pepsi (PEP) Factory in Samara, Russia. Pepsi logo on a blue warehouse.
Pepsi (PEP) Factory in Samara, Russia. Pepsi logo on a blue warehouse.

Source: FotograFFF / Shutterstock

PepsiCo (NASDAQ:PEP) is the NHL’s official sponsor in the U.S. and Canada for the carbonated soft drinks, water, energy drinks and savory snack food categories. PepsiCo has been an NHL sponsor since 2006. In 2022, the company extended its exclusive sponsorship with the NHL for at least another four years through 2026, extending the relationship with the NHL to two decades.

Pepsi’s stock has been a major disappointment in recent years. Over the past five years, it’s gained just 28%, significantly less than the 86% return for the index.

Over the past three years, it’s grown its revenue and operating income by 9.1% and 8.6%, respectively, while its return on invested capital is 15.9%, slightly less than Coca-Cola’s (NYSE:KO) at 16.5%.

In recent years, PepsiCo has been very successful at raising prices without much of a dent in sales. In 2024, it expects 4% organic growth, a return to a more normal growth rate from 9.5% in 2023. Areas of strength in Q1 2024 were in Mexico, Brazil, China and Australia, where organic sales increased by double digits.

Yielding 3.2%, it’s an excellent dividend stock.

Fastenal (FAST)

The blue Fastenal Co (FAST) logo is displayed on a white monitor screen.
The blue Fastenal Co (FAST) logo is displayed on a white monitor screen.

Source: Eyesonmilan / Shutterstock.com

Fastenal (NASDAQ:FAST) is the Official Supply Chain Solutions Partner of the NHL. The company provides NHL teams and arenas with products and services to help maximize the game experience for its loyal fans. It even provides custom tool carts for visiting NHL teams to ensure they have the right tools for their visit.

Long-term, Fastenal has delivered for shareholders. Its five-year gain is 97%, 12 percentage points higher than the S&P 500. In early April, the gap was over 60 percentage points.

However, slower demand was reported and discussed in its Q1 2024 earnings report. In the first quarter, the company’s net sales grew 1.9% to $1.90 billion, while operating income fell 0.8% to $390.2 million. In 2023, its onsite locations surpassed its store locations for the first time. As of March 31, it had 1,872 active sites, up nearly 12% from a year earlier.

Its shares have dropped 12% since its Q1 2024 earnings report on April 11. As a result, director Dan Johnson acquired $229,100 in Fastenal stock (average price of $68.38). His previous purchase on the open market was $51,000 (average price of $51.01) in May 2022.

It became a Dividend Aristocrat in February.

Madison Square Garden Sports (MSGS)

Madison Square Garden during daylight. MSGE Stock
Madison Square Garden during daylight. MSGE Stock

Source: S-F / Shutterstock.com

You can’t benefit from the NHL anymore than Madison Square Garden Sports (NYSE:MSGS), which owns the New York Rangers, the NBA’s New York Knicks and several other sports teams. Its sister company, Madison Square Garden Entertainment (NYSE:MSGE) owns the Madison Square Garden in New York City, where the Rangers and Knicks play.

As Sportico noted in May, the company’s enterprise value is deeply discounted to its estimated value of the NHL and NBA teams. MSGS’s enterprise value is $5.62 billion, 43% less than the $9.88 billion combined value of the Rangers ($2.45 billion) and the Knicks ($7.43 billion).

The Dolan Family controls 71% of the stock. This control position causes the company’s share price to trade at a discount. However, that’s not to say Executive Chairman James Dolan hasn’t created value for shareholders.

“We have a lot of confidence in Jim Dolan,” John Miller, portfolio manager at Ariel Investments said. “He has done really well over the decades to enhance shareholder value. He’s a terrific visionary,” Sportico’s Kurt Badenhausen reported.

“Ariel holds large positions in MSG Sports as well as other Dolan-controlled, MSG-related stocks: Madison Square Garden Entertainment and Sphere Entertainment, which also owns MSG Networks, in addition to the $2.3 billion Sphere venue.”

If you want to invest in hockey stocks and the NHL, this is as close as you’ll get from a public company perspective.

On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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