In this article, we discuss the 10 best sporting goods stocks to invest in.
Although the COVID-19 pandemic continues to leave its mark on markets and businesses around the world, the sporting goods industry has managed to return to pre-COVID-19 levels of growth amid strenuous economic circumstances. While the sporting goods industry contracted in size during 2020, with the market capitalizations of big sports firms falling during the fiscal year, 2021 brought some much-needed recovery for the industry. Despite some uncertainty caused by new viral variants and retightened restrictions, the tailwinds witnessed in 2021 are expected to continue. Overall, the global sporting goods market is expected to grow 8% to 10% a year up to 2025, from €295 billion in 2021 to €395 billion in 2025, according to research by management consultancy McKinsey.
The sporting goods market, which includes a host of different product types, such as athletic footwear, exercise equipment, sports merchandise, and athletic apparel, is a billion-dollar industry. In the United States alone, sporting goods sales amount to approximately $45 billion each year, making it a key player in the industry, holding the lion’s share of the global market with more than 30%. With changing consumer trends, the sportswear sector continues to perform better than other apparel during the pandemic. According to a report, the global sports apparel market generated around $193 billion in revenue in 2021. These revenues are predicted to continue their ascent and are estimated to reach around $270 billion by 2028.
With the return of major sporting events and vaccine rollout, a sense of normalcy has returned that will benefit the sporting goods industry for the next 12 months. While the shifting trends that the sporting-goods industry experienced in 2021 are likely to become even more established in 2022, risks, as well as opportunities, equally abound in this environment. The most successful companies will be those that can adapt to newer trends as they emerge. The same can be said about investors looking to make a profit from the industry.
Given the changing market environment, investors would do well to pick their stocks carefully. To that end, it would also be wise to select stocks that have been known for their strong business fundamentals, resilience in the face of inflation, room for growth, and solid financial positions. Some of these stocks include Nike, Inc. (NYSE:NKE), DICK’S Sporting Goods, Inc. (NYSE:DKS), and Under Armour Inc. (NYSE:UA), among others listed below.
Photo by Cristina Anne Costello on Unsplash
Our Methodology
For this list, we focused on sporting goods companies with solid business fundamentals and growth incentives. We also took into account company financials, most recent quarterly results, and the analyst and sentiment around these stocks.
The hedge fund sentiment around each stock was derived from Insider Monkey’s database which tracks 924 hedge funds as of the fourth quarter of 2021.
Best Sporting Goods Stocks To Invest In
10. Big 5 Sporting Goods Corporation (NASDAQ:BGFV)
Number of Hedge Fund Holders: 14
Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is a California-based sports retailer that was founded in 1955. The company is involved in the sales of sports, fitness, camping, hunting, and home recreation products. A notable player in the sporting goods sphere, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) has consistently increased its dividend yield for 16 years.
In the fiscal year 2021, the net sales of Big 5 Sporting Goods Corporation (NASDAQ:BGFV) stood at $1.16 billion in the United States, an increase from the $1.04 billion in the previous year.
According to its Q1 2022 results that were published on May 3, Big 5 Sporting Goods Corporation (NASDAQ:BGFV) reported earnings per share of $0.41, exceeding estimates by $0.04. Additionally, the company’s revenue for the period stood at $241.98 million.
Among the hedge funds tracked by Insider Monkey, 14 funds were bullish on Big 5 Sporting Goods Corporation (NASDAQ:BGFV) at the end of Q4 2021, compared to 17 funds in the earlier quarter. Alok Agrawal’s Bloom Tree Partners is the leading shareholder of the company, with 568,068 shares worth $10.7 million.
Similar to Nike, Inc. (NYSE:NKE), DICK’S Sporting Goods, Inc. (NYSE:DKS), and Under Armour Inc (NYSE:UA), Big 5 Sporting Goods Corporation (NASDAQ:BGFV) is a decent stock that investors should look out for.
9. Clarus Corporation (NASDAQ:CLAR)
Number of Hedge Fund Holders: 14
Clarus Corporation (NASDAQ:CLAR), a Utah-based company, is a leading developer, manufacturer, and distributor of outdoor equipment and lifestyle products focused on the climb, ski, mountain, and sport markets. The company’s portfolio of brands includes Black Diamond, Sierra, Barnes, PIEPS, SKINourishment, and Rhino-Rack.
Based on the company’s earnings and outlook reports, Clarus Corporation (NASDAQ:CLAR) expects its fiscal year 2022 sales to grow approximately 25% to $470.0 million compared to the previous year. By segment, the company forecasts sales for Outdoor to increase to approximately $237.5 million, the Precision Sport segment to increase to roughly $112.5 million, and the Adventure segment to contribute about $120 million.
On May 11, DA Davidson analyst Linda Bolton Weiser lowered the price target on Clarus Corporation (NASDAQ:CLAR) to $31 from $42 but maintained a Buy rating on the shares. According to the analyst, the company’s Q1 results were “solid” with gross margin “up robustly” due to favorable mix, productivity, and “super fan” brand pricing power.
At the end of the fourth quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $97.7 million in Clarus Corporation (NASDAQ:CLAR), compared to 16 funds in the preceding quarter, with holdings worth $83.56 million.
8. Acushnet Holdings Corp. (NYSE:GOLF)
Number of Hedge Fund Holders: 15
The parent company of the leading golf ball maker Titleist, Acushnet Holdings Corp. (NYSE: GOLF) is a Fairhaven-based corporation that is involved in the design, development, manufacture, and distribution of performance-driven golf products in the United States, Europe, the Middle East, Africa, Japan, Korea, and other countries.
Despite the recent growth the company has enjoyed, its financial performance in the first quarter of the fiscal year 2022 was somewhat mixed. Although its revenue rose by 4.3% from $580.9 million to $606.1 million, Acushnet Holdings Corp. (NYSE:GOLF) reported a decrease in its net income. On the other hand, the company expects sales to come in at between $2.175 billion and $2.225 billion, implying a revenue growth of between 3.8% and 6.1% on a year-over-year basis.
Earlier this April, JPMorgan analyst Kevin Heenan assumed coverage of Acushnet Holdings Corp. (NYSE:GOLF) with a Neutral rating and price target of $45, up from $30. The analyst sees the 2022 outlook for golf as balanced, with tailwinds from pricing, channel re-stock, and product innovation weighed against challenging comparisons and a broader economic reopening.
According to Insider Monkey’s database, Acushnet Holdings Corp. (NYSE:GOLF) was spotted on 15 investment portfolios by the end of the fourth quarter of 2021. The total stakes of these funds in the company amounted to approximately $37.55 million. As of December 31, D.E. Shaw is the largest stakeholder in Acushnet Holdings Corp. (NYSE:GOLF), with stakes valued at $11.7 million.
7. MarineMax, Inc. (NYSE:HZO)
Number of Hedge Fund Holders: 17
A leader in the recreational boat and yacht retail market, MarineMax, Inc. (NYSE:HZO) is a Florida-based company that sells new and used recreational boats, jet skis and water sports accessories, yachts, and related marine products and services, as well as provides yacht brokerage and charter services.
For the fiscal first quarter of 2022, MarineMax, Inc. (NYSE:HZO) announced that its quarterly revenues came in at $610.11 million, up 16.63% on a year-over-year basis, and outperformed the market by more than $68.77 million. The company also reported an EPS of $2.37, beating expert estimates by $0.59.
On April 26, DA Davidson analyst Brandon Rolle initiated coverage of MarineMax, Inc. (NYSE:HZO) with a Buy rating and a $48 price target. According to Rolle, the boating industry is in a much better position compared to other industries he covered, with strong demand and a lean inventory environment allowing MarineMax, Inc. (NYSE:HZO) to outperform investor expectations on both earnings and margins.
As of Q4 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $92.37 million in MarineMax, Inc. (NYSE:HZO), the same as in the previous quarter worth $55.36 million. Of these, Arrowstreet Capital reported holding 482,544 shares worth roughly $28.49 million in MarineMax, Inc. (NYSE:HZO).
6. Hibbett Sports, Inc. (NASDAQ:HIBB)
Number of Hedge Fund Holders: 23
Hibbett Sports, Inc. (NASDAQ:HIBB), headquartered in Birmingham, Alabama, is a leading athletic-inspired fashion retailer with nearly 1,100 Hibbett and City Gear specialty stores, located in 35 states in the United States. In the fiscal year ended on January 29, 2022, net sales of Hibbett Sports, Inc. (NASDAQ:HIBB) amounted to around $1.69 billion, a considerable increase over last year’s $1.42 billion.
Earlier this March, Hibbett Sports, Inc. (NASDAQ:HIBB) reported that its earnings per share for the fiscal fourth quarter of 2021 were valued at $1.25, beating expert estimates by $0.03. Additionally, the company reportedly generated revenues amounting to $383.35 million for the quarter.
Among the hedge funds tracked by Insider Monkey, 23 were bullish on Hibbett Sports, Inc. (NASDAQ:HIBB) at the end of the fourth quarter of 2021, with aggregate positions worth $93.87 million. Israel Englander’s Millennium Management is one of the biggest stakeholders in the company, with 213,861 shares valued at $15.38 million.
Just like Nike, Inc. (NYSE:NKE), DICK’S Sporting Goods, Inc. (NYSE:DKS), and Under Armour Inc (NYSE:UAA), Hibbett Sports, Inc. (NASDAQ:HIBB) is a notable stock in the sporting goods industry.
5. Vista Outdoor Inc. (NYSE:VSTO)
Number Of Hedge Fund Holders: 25
Vista Outdoor Inc. (NYSE:VSTO) is an American designer, manufacturer, and marketer of outdoor sports and recreation products that operates in two markets: shooting sports and outdoor products. The company has performed tremendously in fiscal 2022, delivering 37% revenue gains and outstanding margin expansion to each of its segments.
According to the company’s earnings report, Vista Outdoor Inc. (NYSE:VSTO) reached a record $809 million in sales in Q4 2022, a 36% increase over Q4 2021. Of these, $464 million came from the sporting goods segment, which was driven by an overall strong demand and increased volume sold after the Remington acquisition. On the other hand, the outdoor product segment generated $364 million, led by a growth in action sports and outdoor accessories.
At the end of the fourth quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $460 million in Vista Outdoor Inc. (NYSE:VSTO), compared to 23 in the preceding quarter worth $407 million. Of these, New York-based investment firm Gates Capital Management is a leading shareholder in Vista Outdoor Inc. (NYSE:VSTO) with 5.3 million shares worth more than $246 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Vista Outdoor Inc. (NYSE:VSTO) was one of them. Here is what the fund said:
“Our Strategy outperformed with strong results from consumer discretionary stocks like Vista Outdoor Inc. (NYSE:VSTO). Vista Outdoor Inc. (NYSE:VSTO), a manufacturer of a wide range of products serving the outdoor sports and recreation markets, also performed well in the period on continued demand and growing margins.”
4. Callaway Golf Company (NYSE:ELY)
Number Of Hedge Fund Holders: 34
Callaway Golf Company (NYSE:ELY) is an American global sports equipment manufacturing company that designs, manufactures, markets, and sells golf equipment. The company’s shares rose 7% in after-hours trading as the company raised its financial projections for the year on May 10.
Callaway Golf Company (NYSE:ELY) reported better-than-expected results for Q1 2022 on May 10. The golf company reported revenue and adjusted earnings per share of $1.04 billion and $3.36, respectively, while surpassing market estimates by $16.26 million and $0.12.
On May 12, KeyBanc analyst Brett Andress lowered the price target on Callaway Golf Company (NYSE:ELY) to $30 from $40 and maintained an Overweight rating on the shares. While the strong revenue metrics were already telegraphed at the investor day, the analyst was surprised by the upside in profitability despite near-term supply and inflation challenges. Additionally, the analyst believes the golf industry setup to be relatively resilient and continues to see meaningful earnings power.
34 hedge funds were bullish on Callaway Golf Company’s (NYSE:ELY) at the end of the fourth quarter of 2021, down from 38 funds in the third quarter of 2021. However, the stakes held in the company amounted to $469.62 million at the end of Q4 2021, up from $443.86 million for Q3 2021. Among the hedge funds being tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management is one of the biggest shareholders in Callaway Golf Company (NYSE:ELY) with 3.17 million shares worth more than $87.1 million.
3. DICK’S Sporting Goods, Inc. (NYSE:DKS)
Number Of Hedge Fund Holders: 37
DICK’S Sporting Goods, Inc. (NYSE:DKS) is a Pennsylvania-based company that was incorporated in 1948. The sporting goods retailer offers sporting apparel and accessories, fitness equipment, golf equipment, and hunting and fishing gear products across the United States.
Earlier this May, DICK’S Sporting Goods, Inc. (NYSE:DKS) reported record earnings for its fiscal 2021 fourth quarter ended Jan. 29, 2022, as well as for the fiscal year 2021. The sporting goods retailer reported its Q4 sales reaching $3.35 billion, up 7.3% from the year-ago period, marking the largest sales quarter in the company’s history. It also reported $12.29 billion in net sales for the fiscal year, up 28.3% on a year-over-year basis.
In the fourth quarter of 2021, 37 hedge funds reported owning stakes in DICK’S Sporting Goods, Inc. (NYSE:DKS) according to Insider Monkey’s records, collectively worth approximately $1.3 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held a prominent position in the company, with 1.6 million shares valued at $191 million.
2. Under Armour Inc (NYSE:UA)
Number Of Hedge Fund Holders: 53
Under Armour Inc (NYSE:UA) is a Maryland-based firm that operates as a leading inventor, marketer, and distributor of sports and performance apparel, as well as footwear and sports equipment. The company’s revenue for the fiscal first quarter of 2022 stood at $1.3 billion, a 3.48% increase from the previous quarter.
Despite a rocky Q1, Baird analyst Jonathan Komp is sticking with an Outperform rating and a $15 price target on the shares of the company. The analyst believes that sentiment could improve once Under Armour Inc (NYSE:UA) moves past its fiscal first quarter pressures and reinforces longer-term potential for the company to return to healthy growth rates.
1. NIKE, Inc. (NYSE:NKE)
Number Of Hedge Fund Holders: 68
Arguably the most famous sports-associated brand in the world, Nike, Inc. (NYSE:NKE) is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of athletic footwear, apparel, equipment, accessories, and services.
Earlier this April, JPMorgan analyst Matthew Boss reiterated an Overweight rating on Nike, Inc. (NYSE:NKE) with a $164 price target after the company announced that China would be on pace to deliver “sequential improvement” in the fourth quarter, despite the impact of COVID-related restrictions on the local consumer market.
Nike, Inc. (NYSE:NKE) is a favorite among elite hedge funds, making it a decent choice for anyone wishing to diversify their portfolio. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in NIKE, Inc. (NYSE:NKE) with 8.7 million shares worth more than $1.4 billion. Overall, 68 hedge funds were bullish on the stock by the end of December 2021.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:
“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still underindexed to the women’s category, which we see as a significant ongoing catalyst.”
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Disclosure: None. 10 Best Sporting Goods Stocks To Invest In is originally published on Insider Monkey.
