Look beyond Nike to these seven sporty stocks
There’s a lot of attention being paid to Nike, but it’s important to keep some perspective.
Sure, there’s the controversial launch of a Just Do It campaign with former NFL quarterback Colin Kaepernick as the new face of Nike Inc. NKE, +0.60% There’s also a bit of volatility in the stock.
But the important thing for investors to remember is the long-term performance of this stock. Nike is up 25% this year and about 135% over five years, driven by consistent growth for one for the most iconic brands on the planet.
After all, sports is big business — and there are no shortage of stocks cashing in on everything from yoga pants to camping gear to swimming pools. And in this era of record consumer confidence in America, there’s no better time for investors to cash in on this mega-trend of leisure spending.
Consider a recent report that determined Americans are spending about $890 billion annually on outdoor sports such as camping and fishing. Or a recent survey that found Americans are spending $155 per month and over $100,000 over a lifetime on fitness-related expenses, such as gym memberships.
For better or worse, Nike is a name most investors already know to play this athletics and leisure trend. But there is a wide world of sports stocks out there offering big growth opportunities.
Here are a few worth noting:
As the name implies, Pool Corp. POOL, +1.01% is in the business of swimming pools. With more than 350 locations, it is the largest wholesale distributor of pools and related outdoor products in the world, with operations in North America, Europe and Australia. It’s also no small-time stock, with a market value of almost $7 billion.
Pool Corp. posted record second-quarter results in July, thanks to a net sales increase of 7% and a gross profit increase also of 7%. Consumer-demand metrics continue to look strong, and as a result, Pool Corp.’s stock is trading at a new 52-week high after an impressive run of almost 65% in the past 12 months.
The company also pays a modest dividend of 1.1% to boot.
A leader in “ride-dynamics products,” Fox Factory Holding Corp. FOXF, +0.15% designs and manufactures suspension materials for all manner of vehicles, including mountain bikes, snowmobiles, ATVs and even off-road pickups. Anyone who uses these vehicles can tell you the importance of quality shock absorbers and suspensions on rough, backwoods trails — and there’s a good chance they can show you a Fox sticker on their off-road ride, too.
Though admittedly a niche recreational play, Fox is substantial in size, with about 2,000 employees and about $2.5 billion in market value. It’s also growing fast, with current revenue projects for fiscal 2018 up almost 30% over the prior year, owing to a strong brand and strong consumer spending.
Perhaps the biggest proof of strength is that the shares have risen an impressive 70% in the past 12 months and a whopping 260% in the past five years.
Johnson Outdoors JOUT, -0.97% is another niche play on the great outdoors. The company manufactures and sells canoes and kayaks, fishing gear, diving equipment and camping supplies.
Those kinds of pricey pursuits are a bit cyclical and dependent on consumer-spending trends, but that’s undeniably a good thing these days; the tailwind in domestic discretionary categories has lifted the stock dramatically, with a 12-month return of about 65% and a five-year return of about 300%.
That uptrend shows no sign of slowing down, after strong earnings in August sent Johnson’s stock to a new 52-week high. Details showed double-digit revenue growth to set a new record for sales, and momentum for new products hints that these trends are only the beginning of Johnson’s 2018 success story.
One of the preeminent brands in recreational products, Brunswick Corp. BC, -0.03% specializes in everything from boat engines to fitness equipment to high-end gaming tables. Those are in many ways the ultimate leisure expense, since a $10,000 billiards table or a 50-foot Meridian Yacht are purely purchased out of a desire to live it up and have fun.
Things have been fun for investors in Brunswick stock, too, with gains of more than 20% so far this year. Sales should increase 12% in fiscal 2018 over 2017, and earnings per share are tracking an even bigger gain of roughly 19%.
Brunswick is currently seeing “unprecedented demand” for its outboard engines in particular, according to management’s statement after second-quarter earnings, after a massive launch in 2018 brought the total suite of products to 19 models. The continued demand for these items and others should sustain the stock in 2018 and beyond.
After coming into its own in 2010 and 2011, thanks to the rise of yoga pants and “athleisure” apparel, Lululemon Athletica LULU, -1.14% fell out of favor for several years because a combination of market saturation owing to expansion and competition from other active-wear providers.
However, Lululemon has come back with a vengeance in the past 12 months, with a stellar 150% gain vs. just 18% or so for the S&P 500 SPX, -0.37% in the same period. The outperformance stems from a 2017 restructuring that included the closure of underperforming stores and a big online push, but also because of a massive 20% spike in same-store sales this summer.
Another stock that had been stuck in a rut but really has broken out in 2018 is Callaway Golf ELY, +0.00% which is tracking an impressive 17% growth rate in revenue for this fiscal year. The stock is up about 65% so far in 2018, thanks in large part to a single-day pop of rover 10% in a few days around blowout earnings in August.
Specifically, the golf giant posted a 30% sales jump that topped expectations on the quarter and led management to increase their guidance for the full year. The details showed the company was really hitting the long ball, too, with all operating segments and major product categories posting growth on the quarter.
Unsurprisingly, shares skyrocketed as a result and are now trading at a 17-year high, back to the heyday of Callaway’s initial success with its iconic Big Bertha driver line in the 1990s.
Dick’s Sporting Goods DKS, -1.87% isn’t going to win any medals for growth stock of the year. But in the war of endurance among sporting-goods retailers, Dick’s is the last store standing.
Much as electronics giant Best Buy BBY, +0.20% managed to weather the e-commerce storm and prove its value even in the lower-margin model of brick-and-mortar retail, Dick’s has found a way to succeed even in this digital age.
Sure, Dick’s suffered a pretty steep drop in late August after sales missed the mark. But shares have made up all that lost ground and then some to return to highs hit in early June after a stellar earnings report in May. At the time, the shares surged 15% in a single session after the company topped EPS estimates and raised its full-year guidance. On the whole, Dick’s stock is up over 30% this year and continues to trade near 52-week highs.
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