With the 2012 Olympics beginning this month in London, there are great opportunities for investors in companies abroad. There will be increased advertisement, improvements in technology and transport links, and a rise in tourism. London will also add attractions geared towards the increase in visitors—all creating business opportunities for local companies during and after the Olympics. These companies include real estate and betting businesses.
Look for companies in the telecommunications and technology sectors to profit most. The world’s largest advertising agency, WPP (WPPGY), will be a big beneficiary of the Olympics. Its latest annual report states that the Olympic and Paralympic games, Euro 2012, and the U.S. Presidential election will add 1 -2 percent to their revenue growth. WPP is focused on growing revenues and gross profit margin faster than the industry average. Interestingly, a growing proportion of their sales comes from emerging markets, an increase in acquisitions, and digital sources.
Technology defense and security company, Cobham (COB.L), has leading positions in its core markets and plans to generate revenue by growing and maintaining these positions. With funds to continuously invest in research and development, Cobham manufactures wireless digital audio and video links, such as mesh radio products, high resolution cameras, and high definition download products. Their technology is used for security in the unveiling of “Safe City” initiatives and broadcast events, such as the Olympics. It receives large orders from many countries, including England, the U.S., and Brazil.
Real estate companies will benefit from an improvement in England’s overall economy. The increased focus on London will add recognition to local property companies as well as increase consumer demand to occupy and purchase properties. Shaftesbury (SHB.L), a real estate investment trust which participates in the investment, ownership, and lease of London properties, said it will benefit from the international promotion of London and specifically, the West End. Songbird (SBD.L), the majority owner of Canary Wharf, stated that the Olympics will be centered in the East End and thus will place the East End and Canary Wharf at the center of the world’s attention. It will emphasize the shift of affluence eastward.
A dominant company in the transportation industry is the Go-Ahead Group (GOG.L), owning 21% of the bus market in London. It will profit from increased demand for its transport services during the Olympic games. Although its bus division is expected to remain strong, the rail division may be adversely impacted by low economic growth and competition. Winning the rail franchise will remain crucial for the company.
In the gaming and betting industry, William Hill (WMH.L) is expected to benefit most. It provides services online, on the street, and on the phone. Although it operates worldwide, it is based out of London and represents about 25 percent of the market throughout London. It expanded to Nevada this month by acquiring three chains of race and sport book companies, and has been granted a non-restricted gaming license, the highest tier of licenses in Nevada.
The Olympics present growth opportunities for advertisement, technology, transportation, and London based companies, such as real estate and betting businesses. These sectors have improved in previous Olympic host countries and are anticipating benefits from this summer’s games as well.