15 Best Beaten Down Stocks to Invest In

4) Topgolf Callaway Brands Corp. (NYSE:MODG)

% Decline on a YTD Basis: ~42.5%

Number of Hedge Fund Holders: 22

Topgolf Callaway Brands Corp. (NYSE:MODG) is engaged in designing, manufacturing, and selling golf equipment, golf and lifestyle apparel, and other accessories in the United States, Europe, Asia, and Internationally.

Topgolf Callaway Brands Corp. (NYSE:MODG) saw potential headwinds in the recent past including a decline in same-venue sales of 11% in Q3 2024, with a more significant drop in 3+ Bay events. Apart from this, broader macroeconomic headwinds, such as cautious consumer spending, impacted the revenue growth in both Topgolf venues and its golf equipment segments.

However, Wall Street believes that Topgolf Callaway Brands Corp. (NYSE:MODG)’s stock is well-placed for a revival, with new initiatives and venue expansions anticipated to drive future growth. Furthermore, the company’s intention to pursue the separation of its business into two independent companies i.e., Callaway and Topgolf, should benefit it over the long term. Topgolf Callaway Brands Corp. (NYSE:MODG) believes that creating 2 companies will result in material benefits to the stand-alone businesses.

As per Topgolf Callaway Brands Corp. (NYSE:MODG), the transaction should result in enhanced strategic focus, optimized capital allocation, and simplified operating structure. The company expects to execute the spin-off in H2 2025. TimesSquare Capital Management, an equity investment management company, released its Q3 2024 investor letter. Here is what the fund said:

“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, premium brands, or support services for other consumer companies. Also detracting from results was Topgolf Callaway Brands Corp. (NYSE:MODG), which manufactures golf equipment and accessories, as well as operates entertainment venues. Although recent channel checks indicated that TopGolf activity trends were improving, that softened later in the quarter. Overall revenues and earnings were less than anticipated, which led management to lower its guidance for the rest of the year. The company’s Callaway equipment and apparel business was more stable, though management also discussed a strategic review of the entertainment business. Subsequently, the company announced plans to spin off TopGolf in 2025. While we agreed with the rationale, the timing was at a point of weakness, and we exited the position that was down -31% during the quarter.”