Rock n’ Roll Index- Return of the Electric Guitar

By all indicators in the music world it looks like the electric guitar and rock music has made a comeback in a big way. “Rock n Roll ain’t noise pollution,” famous lyric coined by AC/DC seems just as fitting these days as “Long live rock” by The Who.

After the dark ages of hair bands in the 80′s, punk rock and grunge stole the stage in the 90′s while the last decade was largely an attempt to rediscover what rock is all about. Only two bands survived the 90′s grunge scene: Foo Fighters and Pearl Jam. It wasn’t easy for them to stay relevant but they managed to still draw in large crowds to their shows, largely thanks to the charismatic personalities of Eddie Vedder and Dave Grohl.

But now we are witnessing a complete comeback in the form of alternative rock. Bands like The Black Keys are topping charts and headlining major festivals around the country.  They are most recently known for the success of their album, El Camino, which features songs all over television and the radio like “Gold on the Ceiling,” “Lonely Boy,” and “Sister.” The band has also had songs featured in jewelry commercials and NFL broadcasts.

Helping push the alternative movement are bands like The Killers, The Shins, My Morning Jacket, Arcade Fire, and Kings of Leon.  They each bring a new sound to rock n roll, and are generating worldwide attention. 

Festival Culture

Festival culture is still alive and well.

Some of the most popular festivals around the country are Bonnaroo (Tennesse), Lollapalooza (Chicago), and Coachella (Southern California).  Other smaller scale festivals also occur around the country like Catalpa (NYC), Firefly (Delaware), and Sasquatch (Washington). Crowds of thousands flock to these all day, often all weekend events not just for the music, but also for  the festival vibe. Popular guitar players like Jack White and Gary Clark Jr draw in fans from all over the country.

And then you have the jam bands.  Last year Dave Matthews introduced the “Dave Matthews Caravan” which toured the country with bands like O.A.R. hosting feel-good shows that would make Jerry Garcia and the rest of The Grateful Dead proud. Jason Mraz is another one of these artists who incorporates many different instruments in his music, his most recent album came out in April. 

Sponsors

Green companies and alcohol firms are all over these festivals.  They sponsor special tents and attractions to market their products on site.  The green companies are finding that the festival going music fan is their target demographic as well.

Whole Foods (WFM) is one of the companies sponsoring Lollapalooza 2012 in Chicago in early August. The market offers many organic and healthy foods and much of their clientele are the same people who go to these music and art festivals.

Car companies like Ford (F) and Toyota (TM) use the festivals to advertise to a younger generation. Ford sponsors Bonnaroo, and Toyota is at Lollapalooza.

Lets not forget the sponsors of alcohol at these festivals. Bud Light (Lollapalooza BUD), and Miller Light (Bonnaroo, SBMRY) along with many small liquor companies and smaller breweries that sell their product at these events.

Even technology companies like Dell (DELL) and Google (GOOG) market at the festivals. Dell markets its computers while Google specifically markets Google Play, an e-store.

Side Notes

With the revival of the electric guitar, it could be a good idea to keep an eye out for the guitar maker Fender, especially if kids start walking around with Black Keys or other rock band shirts. Fender was ready for an IPO but recently pulled out due to high levels of uncertainty surrounding the market. They will most likely be back when things calm down, the fact that they were ready for an IPO is the mark of a healthy firm, they simply wanted to avoid a bad debut for reasons out of their control.

Hologram making company Digital Domain Media Group (DDMG) made a big splash at Coachella early this year with the hologram Tupac. They are planning to bring Hendrix, Elvis, and Jim Morrison “back from the dead” as well and these artists could be featured at future festivals.

Don’t forget, Sony (SNE) just became the largest music publisher in the world and with more people looking to listen to rock music, the record companies could see a nice boost as people take more of an interest in their favorite bands.

Business Section: Investing Ideas

Don’t be surprised if your kid decides to pick up a guitar and learns to play the songs made popular by this new generation of Rock n Roll bands. Heck, Mumford and Son have even made the banjo relevant again.

With all of these factors, do you think the music industry can show gains?  From record companies to sponsors to instrument makers there could be room for growth, thanks to the appeal of rock n’ roll and music festivals. Long live rock.

Interactive Chart: Use the Compar-O-Matic to compare market caps for the stocks mentioned below:

1. Sony Corporation (SNE, Earnings, Analysts, Financials): Designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. Sony also is a major music producer. Market cap at $12.63B, most recent closing price at $12.10.

2. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. iTunes is one of the most popular ways to purchase music. Market cap at $574.43B, most recent closing price at $610.08.

3. Ford Motor Co. (F, Earnings, Analysts, Financials): Develops, manufactures, distributes, and services vehicles and parts worldwide. Sponsor of music festivals across the country. Market cap at $35.68B, most recent closing price at $9.25.

4. The Madison Square Garden Company (MSG, Earnings, Analysts, Financials): Operates in the sports, entertainment, and media businesses primarily in the United States. The bigger a band gets, the more likely they are to play the Garden, Black Keys actually needed to add shows. Market cap at $2.67B, most recent closing price at $35.27.

5. Dell Inc. (DELL, Earnings, Analysts, Financials): Provides integrated technology solutions in the information technology (IT) industry worldwide. Sponsor of festivals across the country. Market cap at $21.39B, most recent closing price at $12.16.

6. Anheuser-Busch InBev (BUD, Earnings, Analysts, Financials): Engages in brewing and selling beer in North America, Latin America, Europe, and the Asia Pacific. Many different breweries owned by AB are sold and marketed at festivals and concerts. Market cap at $127.61B, most recent closing price at $77.93.

7. Citigroup, Inc. (C, Earnings, Analysts, Financials): Provides consumers, corporations, governments, and institutions with a range of financial products and services. Sponsor of festivals. Market cap at $77.97B, most recent closing price at $25.99.

8. SAB Miller Corp. (SBMRY, Earnings, Analysts, Financials): Through its subsidiaries, engages in the manufacture, distribution, and sale of beverages worldwide. Official sponsor of one of the nation’s largest festivals, Bonnaroo. Market Cap at $68.5B, most recent closing price at $42.20.

9. Live Nation Entertainment, Inc. (LYV, Earnings, Analysts, Financials): Operates as a live entertainment company internationally. Market cap at $1.74B, most recent closing price at $9.11.

10. Digital Domain Media Group, Inc. (DDMG, Earnings, Analysts, Financials): If Elvis and The Doors go on tour again, DDMG will be behind it. Market cap at $210.35M, most recent closing price at $4.75.

11. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Their record company is one of the largest around. Market cap at $37.57B, most recent closing price at $39.24.

12. Constellation Brands Inc. (STZ, Earnings, Analysts, Financials): Produces and markets alcoholic beverages primarily in the United States, Canada, and New Zealand. Someone has to get the booze to shows. Market cap at $5.17B, most recent closing price at $28.60.

(Written by Ryan Horch)

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