10 Best Sporting Goods Stocks To Buy Now
In this article, we discuss 10 best sporting goods stocks to buy. If you want to skip our detailed discussion on the sporting goods industry, head directly to 5 Best Sporting Goods Stocks To Buy Now.
According to The Business Research Company, the worldwide market for sports and athletic goods experienced notable growth, rising from $165.28 billion in 2022 to $179.1 billion in 2023, with a compound annual growth rate (CAGR) of 8.4%. Looking ahead, it is projected that this market will continue to expand, reaching $238.89 billion in 2027, with an estimated CAGR of 7.5%.
Following a strong performance in 2021, the sporting goods industry has faced several obstacles over the past year, including the risk of a global recession, war in Europe, persistent supply chain challenges, and a rapid increase in interest rates, all of which have contributed to an uncertain and unpredictable global landscape. The sporting goods industry has been relatively fortunate when compared to many other sectors, as it has experienced substantial growth over the last two years, matching or even surpassing pre-pandemic levels. Moving forward, McKinsey & Company sees reasons for optimism in the medium term, primarily due to a growing emphasis on health, fitness, and sports, which is expected to drive further opportunities for the industry. Despite the positive outlook for the medium term, the short-term prospects may present some constraints. Factors such as increasing costs, the possibility of a larger recession, and ongoing operational difficulties could create obstacles in early 2023. According to Colin Browne, interim president and CEO at Under Armour, Inc. (NYSE:UA):
“I believe it will take some time for demand and supply to right themselves, especially as I suspect the economic conditions may well continue to worsen as we go into 2023, with impacts on consumer confidence.”
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As per McKinsey & Company’s Sporting Goods 2023 Report, unit sales during the first nine months of 2022 were 4%-8% below 2021 levels in the United States, and the impact on revenues was not offset by higher average selling prices. Athletic footwear and sportswear had a solid performance in 2021, with over 10% growth (CAGR) from 2019 to 2021. However, growth stalled in 2022 as economic pressures led to a decline in consumer demand. Despite these challenges, the outdoor category showed resilience by reporting 2022 revenues marginally higher than 2021, and 24% higher than pre-pandemic levels. This growth occurred even as units sold fell by 4.5% and average selling prices rose by 5%. Among the sub-categories, apparel and accessories experienced growth at 3% and 5%, respectively, while equipment and footwear declined by 4% and 3%. The boost in outdoor activities has been a positive factor for the outdoor categories, benefiting them over indoor-focused sports like swimming, which may have been impacted by facility closures due to rising electricity costs. In the US, outdoor activities primarily centered around "backyard" themes, providing support to categories such as camping equipment.
Investors looking to diversify their portfolios by branching out in the sporting goods industry can buy stocks including DICK'S Sporting Goods, Inc. (NYSE:DKS), Lululemon Athletica Inc. (NASDAQ:LULU), and NIKE, Inc. (NYSE:NKE).
Our Methodology
We selected the following sporting goods stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Sporting Goods Stocks To Buy Now
10. Acushnet Holdings Corp. (NYSE:GOLF)
Number of Hedge Fund Holders: 15
Acushnet Holdings Corp. (NYSE:GOLF) designs, produces, and markets golf-related merchandise worldwide. The company is divided into four main segments – Titleist Golf Balls, Titleist Golf Clubs, Titleist Golf Gear, and FootJoy Golf Wear. On May 4, Acushnet Holdings Corp. (NYSE:GOLF) reported a Q1 GAAP EPS of $1.36 and a revenue of $686.3 million, outperforming Wall Street estimates by $0.27 and $55.18 million, respectively.
According to Insider Monkey’s first quarter database, 15 hedge funds held stakes worth $78.5 million in Acushnet Holdings Corp. (NYSE:GOLF), compared to 13 funds in the prior quarter worth nearly $50 million. D E Shaw is the leading position holder in the company, with 444,274 shares valued at $22.6 million.
In addition to DICK'S Sporting Goods, Inc. (NYSE:DKS), Lululemon Athletica Inc. (NASDAQ:LULU), and NIKE, Inc. (NYSE:NKE), Acushnet Holdings Corp. (NYSE:GOLF) is one of the best sporting goods stocks to invest in.
Diamond Hill Long-Short Fund made the following comment about Acushnet Holdings Corp. (NYSE:GOLF) in its Q4 2022 investor letter:
“New positions initiated in Q4 included shorts International Business Machines (IBM), Acushnet Holdings Corp. (NYSE:GOLF) and elf Beauty (ELF). Acushnet (GOLF) is a leading manufacturer of golf equipment, accessories and apparel. The company owns several top brands in golf, including Titleist and FootJoy. Golf experienced heightened demand as consumers looked for socially distanced leisure activities over the last several years. We expect some of this enthusiasm — especially from newer golfers — to wane over the next couple years and for the average number of rounds per golfer to normalize from a high in 2021. We also believe some demand for equipment and apparel was likely pulled forward.”
9. Hibbett, Inc. (NASDAQ:HIBB)
Number of Hedge Fund Holders: 17
Hibbett, Inc. (NASDAQ:HIBB) specializes in athletic-inspired fashion items. The company’s retail stores carry a diverse selection of products, such as athletic footwear, fashionable sportswear, team sports gear, and related accessories. It is one of the best sporting goods stocks to buy. On June 6, Hibbett, Inc. (NASDAQ:HIBB) declared a $0.25 per share quarterly dividend, in line with previous. The dividend was distributed to shareholders on June 20.
According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Hibbett, Inc. (NASDAQ:HIBB), compared to 25 funds in the earlier quarter. John Hempton’s Bronte Capital is the leading position holder in the company, with 519,435 shares worth $30.6 million.
Here is what Roubaix Capital has to say about Hibbett, Inc. (NASDAQ:HIBB) in its Q4 2020 investor letter:
“The second best short in the quarter was Hibbett Sports (HIBB), a sporting goods retailer. Many businesses were able to benefit from the spending shifts caused by the pandemic. For example, online retailers, companies that sell into the home improvement markets and grocery stores all saw varying degrees of improvement. We did not see HIBB as a clear beneficiary as they have historically underinvested in their online business. However, they managed to post very strong results during their third quarter from leisure spending trends and the stock reacted favorably. We shorted the strength of this rally and continue to hold our position as we do not see HIBB as a longer-term winner in its markets.”
8. Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH)
Number of Hedge Fund Holders: 23
Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH) is an outdoor sporting goods retailer that offers camping products like backpacks, tents, and outdoor cooking equipment, as well as apparel such as camouflage and sportswear. Additionally, the company provides fishing products like rods, reels, and lures, along with footwear including hiking boots and sport sandals. Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH) is one of the best sporting goods stocks to watch.
On May 30, Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH) reported a Q1 non-GAAP EPS of -$0.39, falling short of market forecasts by $0.02. On the other hand, the revenue of $267.5 million outperformed Wall Street consensus by $0.84 million. Net sales for the second quarter of fiscal year 2023 are estimated to fall between $310 million and $340 million, compared to the market consensus of $333.78 million. The expected range for adjusted diluted earnings per share during the same quarter is $0.02 to $0.15, as opposed to the consensus estimate of $0.14.
According to Insider Monkey’s first quarter database, 23 hedge funds were long Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH), compared to 28 funds in the earlier quarter. J. Carlo Cannell’s Cannell Capital is the largest stakeholder of the company, with 3.20 million shares worth $27.2 million.
Here is what Merion Road Capital has to say about Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) in its Q1 2022 investor letter:
“During the quarter I added to Sportsman’s Warehouse (“SPWH”). SPWH is an outdoor sporting goods retailer with about half of their revenue coming from hunting & shooting products (guns, ammo). I initiated our position back in December following their failed merger with Great Outdoors on the grounds of anti‐trust concerns. It appeared that the stock was being sold off indiscriminately by merger arbitrageurs and valuation seemed attractive, particularly after adjusting for the receipt of a $55mm termination payment and unwind of excess inventory.
While the dust has largely settled from an investor base perspective, SPWH remains attractively priced with a few upcoming catalysts. Fundamentally the company is well positioned. Following the tragic Parkland school shooting two large competitors to SPWH, Dicks Sporting Goods and Walmart, made the decision to exit the category; their absence makes the competitive landscape for SPWH a lot more favorable than in prior years. Furthermore, it is no surprise that gun and ammo sales during covid experienced tremendous growth. Unlike prior cycles, however, this wave saw an increase in new gun buyers rather than purchases by existing owners. SPWH estimates that over the past 18 months the industry created 12mm new firearm owners; using a prior base of 100mm, this implies an increase to their addressable market of 12%. The company is executing on many other internal initiatives including store expansion, omni‐channel growth (e‐comm up to 15% of revenues), loyalty programs (at 3mm members) and new co‐branded credit cards…” (Click here to see the full text)
7. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 25
Foot Locker, Inc. (NYSE:FL) is one of the top sporting goods stocks to invest in. The company is a specialty athletic footwear and apparel retailer operating in North America, Europe, Australia, New Zealand, Asia, and the Middle East. On May 17, Foot Locker, Inc. (NYSE:FL) declared a $0.40 per share quarterly dividend, in line with previous. The dividend is payable on July 28, to shareholders of record on July 14.
According to Insider Monkey’s first quarter database, 25 hedge funds held stakes worth $633.8 million in Foot Locker, Inc. (NYSE:FL), compared to 25 funds in the prior quarter worth $312.2 million. Daniel Kretinsky’s Vesa Equity Investment is the leading stakeholder of the company, with 11.4 million shares worth just over $455 million.
Here is what Miller Value Partners Deep Value Strategy has to say about Foot Locker, Inc. (NYSE:FL) in its Q1 2022 investor letter:
“Finally, Foot Locker (NYSE:FL) came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into the Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”
6. Topgolf Callaway Brands Corp. (NYSE:MODG)
Number of Hedge Fund Holders: 32
Topgolf Callaway Brands Corp. (NYSE:MODG) designs, produces, and markets golf equipment, golf and lifestyle clothing, and related accessories. The company is divided into three segments – Topgolf, Golf Equipment, and Active Lifestyle. On May 9, Topgolf Callaway Brands Corp. (NYSE:MODG) reported a Q1 non-GAAP EPS of $0.17 and a revenue of $1.17 billion, outperforming Wall Street estimates by $0.02 and $30 million, respectively. The profitability and return metrics of Topgolf venues are also getting better compared to the company's previously stated long-term goals.
According to Insider Monkey’s first quarter database, 32 hedge funds were bullish on Topgolf Callaway Brands Corp. (NYSE:MODG), compared to 37 funds in the prior quarter. James Parsons’ Junto Capital Management is the largest stakeholder of the company, with 1.60 million shares worth $34.7 million.
Like DICK'S Sporting Goods, Inc. (NYSE:DKS), Lululemon Athletica Inc. (NASDAQ:LULU), and NIKE, Inc. (NYSE:NKE), Topgolf Callaway Brands Corp. (NYSE:MODG) is one of the top sporting goods stocks to monitor.
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Disclosure: None. 10 Best Sporting Goods Stocks To Buy Now is originally published on Insider Monkey.
