In this article, we discuss 6 best golf stocks to buy now. If you want to see more stocks in this selection, check out 3 Best Golf Stocks to Buy Now.
A latest study by IMARC Group indicates that the global golf equipment market was valued at $7.3 billion in 2021. IMARC Group forecasts the market size to reach $9.35 billion by 2027, reflecting a compound annual growth rate of 4.10% during this period. According to the National Golf Foundation, the number of courses in the 20 years to 2006 jumped 44% to 16,000. As of June 2022, the total has lowered by 11%, but there are still more golf courses in the United States than McDonald’s or Starbucks.
Golf was one of the safest sports amid the COVID-19 pandemic, despite multiple safety precautions and social distancing restrictions. With limited competition in the outdoor activities space, the pandemic has attracted new participants for golf. Among these new participants, a third of all American golfers are now millennials, which is changing the industry trends, as previously it was a sport reserved for older people and corporate employees. In 2019, over 14 million millennials said that they would be interested in playing golf.
In 2021, more than 37.5 million Americans over the age of 6 played golf, including 25.1 million people who played on a golf course and 12.4 million who participated in off-course golf activities at driving ranges, indoor golf simulators, and golf entertainment venues. There were 3.2 million new golf players in 2021, and the industry has received over 2 million new golfers for the last 8 years consecutively. Some of the best golf stocks to consider include Topgolf Callaway Brands Corp. (NYSE:MODG), NIKE, Inc. (NYSE:NKE), and Acushnet Holdings Corp. (NYSE:GOLF).
Our Methodology
We selected the most prominent companies working in the golf sector for this analysis. We picked these stocks based on future growth potential, underlying business fundamentals, and optimistic analyst coverage. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.
Photo by mk. s on Unsplash
Best Golf Stocks to Buy Now
6. Vista Outdoor Inc. (NYSE:VSTO)
Number of Hedge Fund Holders: 25
Vista Outdoor Inc. (NYSE:VSTO) is an American manufacturer and marketer of outdoor sports and recreation products. Vista Outdoor Inc. (NYSE:VSTO) sells products from more than 40 labels, and in May 2022, the company disclosed the acquisition of the launch monitor and golf simulator manufacturer, Foresight Sports. The acquisition was worth $475 million and helped the firm expand into new market segments.
On August 18, Vista Outdoor Inc. (NYSE:VSTO) was awarded a $114 million contract for the 5.56 mm Semi-Jacketed Frangible Cartridge, MK311 MOD 3 (AA40) ammunition, by the U.S. Army. The estimated conclusion date of the contract is August 17, 2027.
Riley analyst Eric Wold reiterated a Buy rating on Vista Outdoor Inc. (NYSE:VSTO) with a $51 price target on September 19. The analyst toured Vista Outdoor Inc. (NYSE:VSTO)’s federal ammo manufacturing facility and was “increasingly confident” in both current ammo demand remaining at high levels and the potential for Vista to gain increasing market share in core ammo categories, given participation trends are shifting positively after the pandemic.
According to Insider Monkey’s data, 25 hedge funds held stakes worth $278 million in Vista Outdoor Inc. (NYSE:VSTO) at the end of the second quarter of 2022, compared to 21 funds in the prior quarter worth $327 million. Jeffrey Gates’ Gates Capital Management is the leading position holder in the company, with 5.6 million shares worth $155.5 million.
In addition to Topgolf Callaway Brands Corp. (NYSE:MODG), NIKE, Inc. (NYSE:NKE), and Acushnet Holdings Corp. (NYSE:GOLF), Vista Outdoor Inc. (NYSE:VSTO) is one of the best golf stocks to buy now.
Here is what ClearBridge Investments has to say about Vista Outdoor Inc. (NYSE:VSTO) in its Q2 2021 investor letter:
“Our Strategy outperformed with strong results from consumer discretionary stocks like Vista Outdoor. Vista Outdoor, 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.”
5. DICK’S Sporting Goods, Inc. (NYSE:DKS)
Number of Hedge Fund Holders: 28
DICK’S Sporting Goods, Inc. (NYSE:DKS) is an American sporting goods retailer, and one of its subsidiaries is Golf Galaxy, which it acquired for $225 million in November 2006. The flagship stores of DICK’S Sporting Goods, Inc. (NYSE:DKS) also feature digital golf ranges, which merits its inclusion on our list of the best golf stocks to buy. For full-year 2022, DICK’S Sporting Goods, Inc. (NYSE:DKS) expects an adjusted EPS of $10.00 to $12.00 versus an earlier EPS estimate of $7.95 to $10.15. The management claims that the company is well-positioned to expand its market leadership and provide long-term sales and earnings growth.
On August 24, Evercore ISI analyst Warren Cheng raised the price target on DICK’S Sporting Goods, Inc. (NYSE:DKS) to $160 from $120 and kept an Outperform rating on the shares. The analyst contended that Q2 showed some primary evidence that normalized EPS for DICK’S Sporting Goods, Inc. (NYSE:DKS) will likely settle out somewhere above $11 to $12.
Among the hedge funds tracked by Insider Monkey, Stephen Mandel’s Lone Pine Capital is the biggest position holder in DICK’S Sporting Goods, Inc. (NYSE:DKS), with more than 5 million shares worth $378 million. Overall, 28 hedge funds held stakes worth $1 billion in DICK’S Sporting Goods, Inc. (NYSE:DKS) at the end of June 2022, compared to 31 funds in the prior quarter worth $1.14 billion.
Like Topgolf Callaway Brands Corp. (NYSE:MODG), NIKE, Inc. (NYSE:NKE), and Acushnet Holdings Corp. (NYSE:GOLF), DICK’S Sporting Goods, Inc. (NYSE:DKS) is one of the best golf stocks to consider.
Here is what Baron Fund has to say about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q1 2022 investor letter:
“Dick’s Sporting Goods, Inc. was the first stock Michael recommended to us shortly after he joined Baron Capital in 2003. Dick’s share price has since increased about nine-fold. Unfortunately, we sold our investment in Dick’s about six years ago and, although it was a successful investment, we did not realize the full benefit of Michael’s recommendation. We sold too soon because I was concerned that competition from internet retailers would have a permanent negative impact on Dick’s stores’ profitability. I was wrong. Dick’s stock price so far has about doubled after we sold…and its prospects have brightened!
We sold even though we considered Ed Stack, Dick’s Chairm”n and CEO, a terrific retailer, a great entrepreneur and a special person. Ed had built Dick’s from three bait and tackle stores his dad started into a uniquely positioned, nationwide chain of 730 sporting goods stores. In fact, Dick’s is now the largest nationwide sporting goods chain. Ed had purchased the three bait and tackle stores, the foundation of Dick’s business, from his dad. Ed’s mother loaned him the money to buy his dad’s stores! I’m not exactly sure what that signifies. But it may have something to do with Carl Icahn’s proclamation that “everything I have is for sale except my children…and maybe my wife.”
Ed and his newly appointed CEO Lauren Hobart visited us last month. Ed asked for the meeting to introduce us to Lauren, as well as to discuss the prospects for Dick’s new, large format stores with attached outdoor, student athletic fields. Lauren then described how well its new format stores were doing in two smaller communities. We also spoke about the successes of Dick’s omni-channel retailing efforts and how desirable Dick’s stores have become to shopping centers trying to lure shoppers to return to their malls.”
4. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 72
NIKE, Inc. (NYSE:NKE), the American retailer of athletic footwear and apparel, offers a range of products including shoes, jerseys, and cleats for sports activities such as association football, basketball, track and field, combat sports, tennis, golf, ice hockey, and cross training for men, women, and children. NIKE, Inc. (NYSE:NKE) has also sponsored the American professional golfer, Tiger Woods, for most of his career.
Bank of America analyst Lorraine Hutchinson observed on October 11 that bulls remain focused on a margin recovery in FY24 for NIKE, Inc. (NYSE:NKE), citing easing foreign exchange headwinds and a fast recovery in China.
On October 3, Baird analyst Jonathan Komp maintained an Outperform rating on NIKE, Inc. (NYSE:NKE) but lowered the price target on the stock to $100 from $127. The analyst said despite his recent attempts to factor in current macro risks, the company negatively surprised by disclosing robust global consumer demand, but much higher-than-expected inventory and a meaningfully lower short-term earnings/margin outlook given actions needed to clear surplus inventory plus incremental currency movements.
According to Insider Monkey’s data, 72 hedge funds were long NIKE, Inc. (NYSE:NKE) at the end of the second quarter of 2022, compared to 67 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the leading stakeholder in the company, with 8.5 million shares worth about $873 million.
Here is what Madison Funds specifically said about NIKE, Inc. (NYSE:NKE) in its Q2 2022 investor letter:
“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.
While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”
Click to continue reading and see 3 Best Golf Stocks to Buy Now.
Suggested articles:
Disclosure: None. 6 Best Golf Stocks to Buy Now is originally published on Insider Monkey.