4 Sporting Goods Companies With Strong Price Movements
Free Book Preview Money-Smart Solopreneur
Americans’ enjoyment of the great outdoors was obvious during the pandemic, with stocks of companies like Pool Corp (NASDAQ: POOL), MarineMax (NYSE: HZO), Academy Sports & Outdoor (NASDAQ: ASO) and Big Five Sporting Goods (NASDAQ: BGFV) notching price gains and growing their earnings.
Companies in the business of sporting goods and other outdoor leisure activities look poised to continue their growth this year.
Pool Corp operates 398 pool equipment and supply stores in North and South America, and Europe, with more locations in the works.
The stock gapped up 2.21% on April 22, following its last earnings report, which trounced estimates on the top- and bottom lines. Shares are up 21.02% over the past three months, and are trading near $427, just off Monday’s all-time high of $431.47.
One potential headwind is a looming shortage of chlorine tablets for pools, due to a fire in a Louisiana facility that produces the tablets, as well as a pandemic-closure-driven shortage of plastic buckets to hold the tablets.
The company addressed this challenge by saying it would have to raise prices. Analysts expect a 47% year-over-year earnings increase for 2021.
Marine Max operates 77 retail stores in 21 states, selling new and used recreational boats, fishing boats and yachts. On Monday, the company said it acquired KCS International, known as Cruiser Yachts.
The deal allows Cruisers to more than double its capacity over time, and ensures that MarineMax will have a premium, American-built yacht as part of its product line.
The stock gapped up 5.83% on April 26 after the company’s quarterly report, which topped both earnings and revenue estimates.
The stock has been forming a cup-shaped base since March 22, when it pulled back from a session high of $63.99. As of now, that’s the buy point, but it’s possible the cup could form a handle, which could offer a lower buy point.
Academy Sports & Outdoor is a newly public company, having made its debut in September, just in time to run up along with the broader market, and to benefit from the continued interest in sports and outdoor activities.
The Texas-based company operates 295 stores in 16 states, mainly in the south. The company is aggressively planning for expansion. Analysts expect continued profitability, despite that goal, but earnings are expected to decline by 32% this year, to $2.87 per share. It’s perfectly normal to see a decline in earnings, or even a loss, as companies put their money into expansion, instead of focusing on profitability.
The stock is currently consolidating below its April 6 high of $33.74. It’s holding above its 50-day moving average. Notably, the stock does not yet have a 200-day trading history, so there is not yet a 200-day line as a gauge of institutional support.
Academy boasts a year-to-date price gain of 50.41%.
The stock is a small cap, so it trades in a somewhat volatile fashion, not unusual for a young, small stock.
Big 5 Sporting Goods operates 430 athletic apparel, exercise equipment and outdoor gear stores in 11 states.
This is a very small company, with a market cap of just $409 million, which means investors and traders must be cognizant of liquidity concerns. A stock this small is not widely held by institutional investors, who generally have more rigorous trading rules than retail investors. That lack of institutional ownership can result in volatility and wide intraday price swings.
In fact, this stock does have a beta of 1.79, indicating a relatively high degree of volatility.
The company reported first quarter results after the close on Tuesday. Same-store sales increased 31.8% in the quarter, contributing to sales of $272.8 million, up from $217.7 million a year ago.
Earnings came in at $0.96 per share, up from a loss of $0.22 per share a year ago, the first quarter that was impacted by pandemic lockdowns.
The company noted it’s carrying zero debt, and that it increased its quarterly cash dividend to by 20% to $0.18 per share, and declared a special cash dividend of $1.00 per share.
The stock has been trading at its best levels since 2016, trending above its 10-day moving average.
Featured Article: Trade Deficit