The Fantasy Football season is approaching and all of sports geeks on the planet will soon dive head first into magazines, spreadsheets and YouTube videos of players we have never heard of in hopes of finding that diamond in the rough that takes us to the championship game. Thankfully I found a brilliant way to talk about the upcoming football season while still having the conversation be relevant to SA readers - I am going to compare stocks to various football players and their future success this season/year.
Now it is time for tight ends - I mean Auto Manufacturer's.
With the league becoming more pass oriented there has been a select group of TE's who have skyrocketed above most WR's to the top of fantasy draft lists. The NFL has had its fair share of great fantasy tight ends before last season - most notably Antonio Gates. This season 2 tight ends have emerged as potential greats: Rob Gronkowski and Jimmy Graham.
While searching for an industry that had 2 major players I decided the auto manufacturers would fit best. Ford Motor Co. (F) and General Motors Company (GM) are the cream of the crop when it comes to America car companies. Ford is the auto company most famous for not needing a bailout from the American taxpayer. Tried and true products like the F-150 have been bought by generations of families who would never consider another make or model. Ford has had its share of trouble in the market recently with shares underperforming, down 15% YTD. This selloff has made the fundamentals very attractive in my opinion (remember this point). Trading at a forward multiple below 6 with a PEG ratio of .25 the shares have fully priced in a deterioration of the economic picture in Europe. I believe the downside has been baked in and the overreaction by traders has provided another opportunity for long-term investors to grab shares on the cheap. How does this all relate to fantasy football? When the New England Patriots signed Brandon Lloyd this off season every analyst predicted touchdowns galore for the Brady/Lloyd combo - which could only mean less TD's for Rob Gronkowski.
Gronkowski owns a number of NFL tight end scoring and receiving records, including the single-season records for tight ends for most receiving touchdowns (17), most total touchdowns (18), and most receiving yards (1,327), all set in 2011. He also is the first tight end in NFL history to lead the league in receiving touchdowns for an entire season. (wikipedia)
It seems as if Gronk's fantasy stats have no where to go but down, kind of like how one may think Ford's shares have to continue lower until this whole European mess is figured out. Like in the case with Ford, I believe the recent relative devaluation of Gronk provides an opportunity for fantasy owners to buy low. I believe after Calvin Johnson is selected that Gronk should be the 2nd selection for anyone seeking a pass catcher this year in fantasy. Lloyd will help stretch the field, taking away all those pesky safeties to leave Gronk all alone in the middle against linebackers.
Jimmy Graham of the New Orleans Saints is the second most selected and talked about tight end in this year's fantasy circle. Graham caught 99 balls for 1310 yards and 11 TD's in 2011 and should have no problem repeating those numbers in 2012. Jimmy and GM are similar because they are less loved by analysts than their counterparts Gronk and Ford. GM has emerged from bankruptcy healthy and with new majority ownership (remember this point). The stock is down 3% YTD, but off 30% in the past year. Fundamentals look strong with forward earnings below 5x and a PEG ratio of .43. Free cash flows aren't strong at about 14x compared to Ford's at 7x. Overall the stock looks fairly valued compared to its peers just as Jimmy Graham seems fairly valued being drafted in the 3rd or 4th round in fantasy drafts. While Drew Brees remains his QB, the loss of Sean Peyton due to a suspension could hurt Jimmy. This change in leadership at the top could effect his performance more than I currently predict.
I would like to engage the readers to see how they view the following comparisons. Please leave your comments, and thanks for reading!
Vernon Davis - Tesla Motors, Inc. (TSLA)
Jason Witten? Fred Davis? Antonio Gates?
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in F over the next 72 hours.