The real (stock) winners of The Melbourne Cup

While only Victoria has a public holiday for the horse race, there’s no question that The Melbourne Cup has an impact on wider Australia. There would be few companies not hosting at least a couple of drinks during the race itself, let alone lunches or other functions. Then there are the thousands putting down coins for sweeps – or taking a punt using one of the betting apps or temporary betting stands across the city.

You might think the real winner is the owner, trainer, jockey and horse with their $600,000 gold cup (see Jordan Eliseo's wire for more detail on the makings). But truly, the winner is businesses. Victoria is one of the biggest beneficiaries, with the Cup generating $422.1m in gross economic benefit last year. There are also flow-on benefits to companies Australia-wide. After all, 10.3 million Australians watched, listened or participated in a Melbourne Cup-related activity last year.

If you just think in immediate terms, there are gambling companies and hospitality companies. Extend that further, and you’ll also see consumer discretionary in the form of fashion, travel, and tourism benefit from Victoria’s day of days.

In this wire, I’ll take a look at some of the companies generating big gains off the back of the horses and how they are performing. This is by no means an exclusive list - and as always, please do your own research and consult some professional advice before making any investment decision.

The obvious start: gambling

It’s clearly a massive day for the betting companies – and the peak of the racing carnival in Australia. Tabcorp is the naming partner for Champion Stakes Day next week and benefits from that strong relationship with Victoria Racing Club. But that doesn’t mean competitors like Pointsbet don’t benefit too. Pointsbet processed 683,000 bets alone at The Melbourne Cup in 2021.

The prospects for betting companies continue to build too. Earlier this year, Australian bets to sports gambling companies hit $50 billion. That is no small figure when you consider our relatively small population. Some of the above also operate overseas. For example, Pointsbet has won several licenses to operate in various US states which should see revenue build.

Based on Market Index’s consensus tool, Tabcorp and Pointsbet both rank as BUY, BlueBet is as yet unrated and BetMakers is a STRONG BUY. You can see BetMakers' performance for the last year below.

Drinking and eating 

Treasury Wine Estate (ASX: TWE), Endeavour Group (ASX: EDV), Australian Vintage (ASX: AVG), Charter Hall (ASX: CHC)

Whether you win or lose, it’s a day of celebration. Some companies might be ordering the wine to serve staff as they watch the race on a big screen. Some people might be ordering to party at home. Others might be flocking to pubs and hotels across Australia both during the day and at night.

If you were Treasury Wine, Endeavour Group or Australian Vintage, today would certainly be a day to pop the cork on a bubbly. Although some of your subsidiaries might be run off their feet with patrons and bookings, such as Endeavour Group’s ALH Group which operates over 350 pubs.

Charter Hall may be an unexpected inclusion on the list, but it’s one of the biggest pub landlords in Australia based on its 50% acquisition of ALE Property Group in 2021 via the Charter Hall Long WALE REIT (ASX: CLW).

Based on Market Index’s consensus tool, both Treasury Wines and Endeavour Group rank as BUY, Charter Hall is a BUY, though the Charter Hall Long WALE REIT ranks as a SELL. Australian Vintage ranks as a STRONG BUY. You can see Australian Vintage’s performance for the last year below.

It’s the Faaashion Daaarling 

Cettire (ASX: CTT), City Chic Collective (ASX: CCX), Premier Investments Limited (ASX: PMV), Myer Holdings (ASX: MYR)

Despite the challenging economic climate, you can still expect to see some spending for the fashions on the field. Australia is not known for the high luxury brand labels that might be favoured for cup attendees. Our only locally-listed high-end fashion retailer is Cettire, which specialises in selling luxury fashions through its online store. Other options like City Chic, Premier Investments and Myer Holdings may also see a boost in parts of their portfolios.

The more affordable end of fashion can be a tough way to turn a profit – and it’s certainly feeling the pinch at the moment. The plethora of discount incentives and sales to get people shopping is just one piece of evidence for the challenges.

It’s not all bad news though. Budget options may be more appealing than their higher-end peers in this environment.

Based on Market Index’s consensus tool, Cettire is ranked a STRONG BUY, City Chic Collective and Premier Investments both rank as a BUY, while Myer Holdings is a STRONG SELL – hardly a surprise to anyone who has been inside one of their embattled stores of late. You can see the one-year performance for Cettire below.

And finally, travel and airlines 

Air New Zealand (ASX: AIZ), Alliance Aviation (ASX: AQZ), Corporate Travel Management (ASX: CTD), Flight Centre (ASX: FLT), Helloworld (ASX: HLO), Qantas (ASX: QAN), Regional Express Holdings (ASX: REX), Webjet (ASX: WEB)

There’s no question the state of Victoria is seeing an influx of guests, with regional visitors heading into the state capital, interstate guests and even – yes really – international visitors and celebrities.

Last year, 60,897 people travelled to Victoria for the Melbourne Cup.

While this is a more localised benefit than some of the other companies, you might expect a boon to the airlines with a Melbourne flight along with booking companies for flights and hotels like Flight Centre, Webjet, Corporate Travel Management and Helloworld.

It’s been a mixed bag for travel companies – there was a significant post-COVID revenge travel trend in 2022 that saw profits balloon but some, including Fidelity’s Casey Mclean, argue that the travel boom is about to burst. Of course, this is also before we talk about what’s been happening with the Flying Kangaroo of late too.

Based on Market Index’s consensus tool, Qantas, Alliance Aviation, Corporate Travel Management and Helloworld rank as STRONG BUYs, Flight Centre and Webjet as BUY while Air New Zealand is a SELL. Rex is not covered by the tool. You can see the 1 year performance for Qantas, Alliance Aviation, Corporate Travel Management and Helloworld below.

And the horses are off...

Livewire’s own Chris Conway recently wrote on the merits of investing in what you know, so if you are participating in today’s Melbourne Cup, perhaps you could be earning back some of your spend in future dividends if any of those companies you use are in your holdings. 

Either way, do your research – and that goes for betting on horses too – and, in the (amended) words of betting company disclaimers: Invest Responsibly.