In this article, we’re going to talk about the 8 best golf stocks to invest in according to hedge funds.
Investing in the Booming Golf Industry
The golf industry has gained immense popularity for various reasons, making it a significant part of global sports culture. According to the National Golf Foundation, golf’s international reach is estimated at 123 million. In the US, over a third of the population aged 5 and older engaged with golf in 2023, a 30% increase since 2016. Its appeal lies not only in the challenge it presents, requiring skill, strategy, and patience but also in the social and recreational aspects it offers. Its inclusion in international events like the Olympics has contributed to its widespread acceptance and growth, attracting diverse demographics across different countries.
As reported by Grand View Research, the global golf equipment market, valued at $7.48 billion in 2022, is expected to grow at a 5.0% CAGR from 2023 to 2030. This growth is fueled by rising disposable incomes, increased golf course development, global golf tourism, and the rising participation of women in the sport. Innovative product development by industry leaders is further driving market expansion. While the COVID-19 pandemic disrupted the market due to global lockdowns, the industry is recovering and is expected to see continued growth.
Following a notable boom in 2020, total golf participation in the US surpassed 40 million for the first time in 2022, highlighting the sport’s increasing popularity, according to NBC Sports Next. Several key trends are shaping the golf landscape in 2024. First, women are playing a pivotal role in driving golf’s popularity, with recent studies revealing that they constitute 49% of surveyed golfers. The National Golf Foundation reported a remarkable 15% increase in female golfers from 2020 to 2022, contrasting sharply with a mere 2% rise among male golfers during the same period.
Additionally, golf has transformed into a social experience, with nearly half of the surveyed golfers indicating they primarily play with friends. This shift emphasizes the communal aspect of the game, which can be leveraged by course managers to tailor marketing strategies and enhance engagement. Furthermore, there is a rising demand for golf lessons, with 36% of golfers reporting they took lessons in the past year, this figure jumps to 67% among GolfNow users, indicating a strong desire to improve skills regardless of competitive aspirations.
Golf stocks can be categorized under consumer cyclical stocks for several reasons. First and foremost, golf-related products and services, such as equipment, apparel, and memberships, are generally considered discretionary items. This means that consumers tend to spend more on these products when economic conditions are favorable. As a result, golf stocks exhibit characteristics typical of consumer cyclical stocks, which thrive during economic expansions and often suffer during downturns. Furthermore, the golf industry often reflects broader consumer trends. Increased participation in leisure activities like golf typically indicates a robust economy. Companies involved in the golf industry in one way or another are directly linked to consumer spending patterns in leisure and recreation, which are key aspects of the consumer cyclical sector. During economic downturns, consumers may prioritize essential spending over discretionary activities like golfing, leading to a decline in revenue for these companies.
On October 23, Jeff DeGraaf, Chairman and Head of Technical Research at Renaissance Macro, joined ‘Closing Bell’ on CNBC to discuss market seasonality and why he thinks it’s a good time for strong returns. He believes that seasonals have set up a nice cyclical trade from now through 2025. Jeff DeGraaf noted that while there is currently limited internal momentum, this should not be viewed negatively, rather, it could signify a consolidation phase.
He highlighted a unique market condition characterized by overbought conditions in both yields and the dollar, which are currently in a downtrend. Historically, when these conditions contract, it tends to be favorable for cyclical stocks. He emphasized that historically, the end of October marks one of the most bullish weeks for the market’s three-month forward returns. Given this confluence of factors, including overbought conditions and seasonal trends, DeGraaf believes there is potential for a cyclical trade to gain traction through the remainder of the year and into the first half of 2025.
Addressing concerns about yields and the dollar, he acknowledged that there is uncertainty surrounding their future movements, particularly with the upcoming elections. However, he maintained that his quantitative measures indicate negative trends for both yields and the dollar. DeGraaf suggested that while some investors may be recalibrating their expectations regarding these factors, the current overbought conditions are likely to subside as the market moves through the fourth quarter.
His overall insights suggest a cautiously optimistic outlook for cyclical stocks as they navigate current market conditions characterized by overbought indicators and seasonal trends. Golf stocks present a compelling investment opportunity as they align with the broader trends of consumer cyclical stocks, thriving during economic expansions. With increasing participation in leisure activities and projected growth in the golf industry, golf-related companies are well-positioned to benefit from rising consumer spending, which is why we’re here with a list of the 8 best golf stocks to invest in according to hedge funds.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of 15 golf stocks with high analysts’ upside potential. We then selected the 8 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Best Golf Stocks To Invest In According to Hedge Funds
8. Sacks Parente Golf Inc. (NASDAQ:SPGC)
Average Upside Potential: 531.58%
Number of Hedge Fund Holders: 1
Sacks Parente Golf Inc. (NASDAQ:SPGC) manufactures putters with exclusive, patented technology for better accuracy, distance control, and feel. Its putters are designed with a low balance point to promote a smooth putting stroke and improve roll. It leverages technology to enhance the overall golf experience for its customers, aiming to improve course operations, player engagement, and revenue generation.
The company is rebranding its putter and shaft divisions as NEWTON GOLF. This rebranding aligns with its commitment to physics-based innovation and aims to streamline its brand structure. The new Newton Gravity putters will feature a modern design while retaining the patented ULBP technology. All NEWTON GOLF products are proudly made in the USA.
It made $813,000 in Q2 2024 revenue, achieving multiple significant milestones. It secured 1,400+ leases, totaling ~4.8 million square feet, with 30% of these being new deals. The foot traffic increased by 5%, and total sales volume rose by ~2% year-over-year. The Mall and premium outlets combined reported retailer sales per square foot of $741.
Driven by resilient consumer spending, operational excellence, and continued leasing momentum, the company is poised for growth. Its strategic initiatives, including new developments, redevelopments, and strategic partnerships, will help in value creation for shareholders.
7. Big 5 Sporting Goods Corp. (NASDAQ:BGFV)
Average Upside Potential: 140.64%
Number of Hedge Fund Holders: 9
Big 5 Sporting Goods Corp. (NASDAQ:BGFV) is a retailer of sporting goods, equipment, and accessories. It provides athletic shoes, apparel, and accessories, a range of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, winter and summer recreation, and roller sports. Golf offerings encompass clubs, balls, bags, and accessories from popular brands. It also provides golf apparel and footwear to cater to golfers of all levels.
The company’s second-quarter 2024 performance was marked by a decline in net sales to $199.8 million, down 9.9% year-over-year. Gross profit margin also contracted to 29.4% from 32%. It incurred a net loss of $10 million, translating to a loss of $0.46 per share. These unfavorable results were primarily attributed to a decrease in same-store sales and a rise in distribution, selling, and administrative expenses. As the retail industry continues to face challenges from declining discretionary spending, the company plans to close 11 stores to reduce costs.
Main merchandise categories experienced a decline in sales, with apparel down 8%, footwear down 9%, and hard-goods down 11%. To address the sales headwinds, it reduced inventory by 10.8%. At the same time, Q3 got off to a strong start, benefiting from the 4th of July calendar shift and robust summer product sales driven by a widespread heat wave.
While the current economic climate presents challenges, Big 5 Sporting Goods Corp.’s (NASDAQ:BGFV) strong value proposition and well-positioned product assortment offer resilience. The anticipated easing of year-over-year comparisons and strategic focus on cost management position it for a return to growth as macroeconomic conditions improve.
6. Amer Sports Inc. (NYSE:AS)
Average Upside Potential: 10.13%
Number of Hedge Fund Holders: 14
Amer Sports Inc. (NYSE:AS) is a global group of the world’s most recognized and respected sports and outdoor brands, including Wilson, Arc’teryx, Salomon, Atomic, and Peak Performance, focusing on premium sports and outdoor products, catering to athletes and enthusiasts across various sports, including golf. Wilson, in particular, is a major player in the golf industry, producing high-quality golf equipment like clubs, balls, and accessories. Although it produces golf equipment, the primary recognition is for products in tennis among others.
In the second quarter of 2024, the company achieved significant revenue growth, increasing by 16% to $993.80 million. This growth was driven by robust performance across all segments, with Technical Apparel revenue increasing by 34%. Outdoor Performance revenue grew by 11%. While the Ball & Racquet Sports segment saw a modest 1% increase year-over-year. Adjusted net income increased by 129% to $25 million, or $0.05 diluted earnings per share.
In the earlier days of October, the company reported a significant growth in Greater China during the recent Golden Week holiday. CEO, James Zheng, highlighted this strong performance during investor meetings in Shanghai. Golden Week, a major shopping period in China, saw Amer Sports Inc.’s (NYSE:AS) revenue surge over 60% year-over-year. This growth was driven by increased sales at Salomon, Wilson, and Arc’teryx stores. The company remains optimistic about the long-term growth prospects in China, particularly in the outdoor segment, which has shown resilience despite broader economic challenges.
Amer Sports Inc. (NYSE:AS) exceeded expectations across key metrics in Q2. The company’s premium brands, particularly Arc’teryx, continue to drive significant growth and profitability. With a robust product pipeline and disciplined financial management, it is well-positioned for continued success in the future.
5. Topgolf Callaway Brands Corp. (NYSE:MODG)
Average Upside Potential: 32.52%
Number of Hedge Fund Holders: 17
Topgolf Callaway Brands Corp. (NYSE:MODG) is a global sports equipment manufacturer specializing in golf products, including clubs, balls, and accessories like bags and gloves. It operates through 2 main segments: Topgolf, which offers technology-driven golf entertainment with interactive driving ranges and social spaces, and Golf Equipment, featuring renowned brands such as Callaway Golf, Odyssey, and OGIO. Committed to expanding its reach, it caters to golfers of all skill levels through innovative products and engaging experiences.
The Topgolf segment continues to be a significant growth driver, with Q2 2024 revenue up 5% and operating income increasing by 27.5%. This demonstrates the segment’s resilience and operational efficiency, even in the face of macroeconomic challenges. The company aims to expand this segment to 250 locations, driving future growth.
While the Callaway Golf segment experienced a decline in equipment sales, primarily due to last year’s successful Big Bertha launch, the brand’s strong reputation and the enduring demand for premium golf equipment suggest a recovery is on the horizon. It holds the top position in golf clubs and the second position in golf balls.
It’s making significant strides in its digital strategy, particularly for its Topgolf brand. The focus on digital business is evident in its increased digital sales penetration, which rose to 35% in Q2 2024. By investing in technology, talent, and data analytics, it aims to further enhance its digital capabilities and drive growth in the future.
The company presents a compelling investment opportunity, backed by its diverse portfolio of brands and strong financial performance. With a diverse portfolio spanning entertainment, sports, and lifestyle markets, Topgolf Callaway Brands Corp. (NYSE:MODG) is well-positioned for long-term growth. Despite short-term economic pressures, its strong fundamentals and strategic initiatives make it an attractive investment choice.
Polen U.S. Small Company Growth Strategy stated the following regarding Topgolf Callaway Brands Corp. (NYSE:MODG) in its fourth quarter 2023 investor letter:
“Topgolf Callaway Brands Corp. (NYSE:MODG) was created in 2021 with the merger of Callaway, a longstanding and slower-growing collection of high-quality golf brands, and Topgolf, an emerging sports and entertainment company. We spent over a year researching Topgolf Callaway as we sought to gain comfort with the level of earnings post-pandemic (golf popularity increased significantly and the Topgolf operating model. Importantly, we believe the Topgolf business model has significant room for growth both in units and in unit-level profitability. At the same time, the core Callaway brands provide ballast and cash flow to be reinvested to drive future growth. Beyond stores/units, Topgolf Callaway has invested in great brands and golf technology that we believe will create additional runways for growth. While the company is profitable, earnings have been under pressure over the past year. However, we believe they will reach an inflection point based on business mix and growth in Topgolf sometime in FY24, before growing at a consistent low-to-mid teens rate driven by store/unit expansion.”
4. Acushnet Holdings Corp. (NYSE:GOLF)
Average Upside Potential: 14.05%
Number of Hedge Fund Holders: 21
Acushnet Holdings Corp. (NYSE:GOLF) operates a series of brands that manufacture golf equipment, clothing, and accessories. Brands include Titleist and FootJoy. Titleist is renowned for its high-performance golf balls and clubs, trusted by many professional golfers. FootJoy is a major player in the golf footwear and apparel market, offering a range of products for golfers of all levels. The company is committed to innovation and excellence, continuously striving to provide golfers with the best equipment and apparel to enhance their game.
The recent capital investments are already paying off, with increased urethane capacity and improved efficiency in the ball plants and custom imprint facilities. Titleist Golf Clubs had Japan and EMEA as the key growth markets, while the US market experienced a 7% increase, driven by golf balls, FJ Apparel, and other categories.
The company’s second-quarter net sales reached $683.87 million, a modest 0.80% year-over-year increase. This uptick was primarily attributed to the strong performance of Titleist Golf Balls. Net sales for the first half climbed 2% to $1.39 billion, with Titleist Golf Balls and Golf Clubs being key drivers, growing 7% and 5%, respectively. Notably, Titleist Golf Balls achieved double-digit growth in the US and Korea, even in a competitive market. To meet this robust demand, 3 Golf Ball production facilities are currently operating at full capacity.
It’s optimistic about the future of its golf ball and club businesses. Despite short-term challenges in certain regions due to excess inventory, Acushnet Holdings Corp.’s (NYSE:GOLF) strong brands and product pipeline position it for long-term growth. Key product launches and strategic investments will drive future success and enhance shareholder value.
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.”
3. Academy Sports and Outdoors Inc. (NASDAQ:ASO)
Average Upside Potential: 19.89%
Number of Hedge Fund Holders: 28
Academy Sports and Outdoors Inc. (NASDAQ:ASO) is a sporting goods retailer that offers a range of athletic footwear, apparel, and equipment for various sports, including golf. Golf offerings include clubs, balls, bags, and accessories from a variety of popular brands, as well as golf technology and training aids. It also provides golf apparel and footwear designed to cater to golfers of all skill levels, ensuring a comprehensive selection for enthusiasts and professionals alike.
Sales for FQ2 2025 declined 2.15% year-over-year to $1.55 billion. The company’s core customer base, earning between $50,000 and $150,000 annually, remained cautious due to inflationary pressures and rising household debt. This led to reduced consumer sentiment and increased reliance on credit and buy-now-pay-later options. Additionally, severe weather events, including tornadoes and hurricanes, disrupted operations in key markets. Despite these challenges, the company remained committed to supporting its team members and communities affected by the storms.
The decline in quarterly revenue was primarily driven by a 7.4% decrease in transactions, partially offset by a 0.5% increase in average ticket size. Inventory balance increased by 4% to $1.37 billion, while inventory units remained flat on a per-store basis. The company remains committed to its capital allocation strategy, prioritizing financial stability, self-funding growth initiatives, and increasing shareholder returns through share repurchases and dividends.
The company remains optimistic about its long-term growth prospects. its strategic focus on key shopping moments, value pricing, and innovative product offerings continues to drive sales, particularly in footwear and outdoor categories. While the back-to-school season was slightly weaker than anticipated, Academy Sports and Outdoors Inc. (NASDAQ:ASO) is confident in its ability to capitalize on upcoming holiday seasons and new product launches and is well-positioned to improve its top-line performance.
Voss Capital made the following comment about Academy Sports and Outdoors, Inc. (NASDAQ:ASO) in its Q1 2023 investor letter:
“Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is a sports and outdoor retailer based in Houston, TX, with 268 locations across 18 states. ASO is concentrated in the south and southeast, which contain many of the fastest growing markets in the country in terms of both population and labor force. Of ASO’s current footprint, 40% of stores are in Texas with another 40% spread across Florida, Georgia, Alabama, North Carolina, South Carolina, Arkansas, Oklahoma, and Tennessee – all states in the top 20 for net migration since 2020. ASO recently hosted an investor day where they presented their plan to reach $10 billion in revenue, 13.5% operating margins, and 10% net margins by 2027, with a 30% ROIC. This plan includes 120 – 140 new store openings and 3% average same-store sales for existing stores. The company emphasized that these targets were calculated with the assumption that there may be a recession in 2023 or 2024. While there are typically a lot of risks associated with a retailer or restaurant expanding into new markets that aren’t familiar with the brand, we believe ASO has a good track record of doing this successfully and profitably. 7 All ASO’s stores are profitable6, including stores that are the only Academy location in the state such as in West Virginia, Virginia, or Illinois. In fact, ASO’s stores are so profitable that even its worst quartile of stores generates the same amount of operating income ($2 million EBIT per location) as its largest competitor’s average store7.
Two of ASO’s three distribution centers are currently operating at only 50% of capacity, giving them plenty of space to grow into with lower incremental capital needs. If the company executes on its guidance, it will generate $3.5 billion in free cash flow cumulatively from 2023 – 2027. Given this FCF build (assuming no buybacks or dividends), ASO’s enterprise value in 2027 (at the current stock price) would be $1.8 billion or 1.1x 2027 EBIT. The 75th percentile of ASO’s retail peer group trades at 14.5x FY2 EBIT. Achieving these targets over the next four years would cement ASO among the best-in-class public retailers, coming in above the 90th percentile in value-driving metrics including revenue growth, margins, and ROIC. However, even if ASO is valued at just the current median EV/EBIT multiple of the peer group (8.5x) in 2026, it would result in an enterprise value of $11.5 billion. If one adds on the estimated $3.2 billion in net cash in 2027, this will equate to an equity value of $14.7 billion or $184/share, 207% upside from today’s price of ~$60/share or a 45% 3-year CAGR. This assumes the management team can more or less hit the targets they laid out at their 2023 investor day in April–but should they whiff, there could be a downside buffer (or further upside) if there is any value-additive capital allocation along the way.”
2. DICK’S Sporting Goods Inc. (NYSE:DKS)
Average Upside Potential: 22.33%
Number of Hedge Fund Holders: 34
DICK’S Sporting Goods Inc. (NYSE:DKS) is the largest sporting goods retailer in the US and offers a range of athletic footwear, apparel, and equipment for various sports, including golf. Its golf offerings include clubs, balls, bags, and accessories from popular brands such as Callaway, TaylorMade, and Titleist. It operates dedicated golf sections within its stores and has expanded its Golf Galaxy brand to include performance centers that feature advanced technologies like TrackMan for custom fittings and lessons.
In the second quarter of fiscal year 2025, the company generated $3.47 billion in sales, a 7.75% increase year-over-year. Same-store sales rose by 4.5%, driven by growth in both average ticket size and transaction volume (7% boost), as well as strong performance in footwear and athletic apparel. There was a 15% increase in e-commerce sales and a focus on profitable private-label products. The company’s strategic partnerships, such as the recent deal with a top athletic brand, and plans for new store openings demonstrate its commitment to future growth.
DICK’S Sporting Goods Inc. (NYSE:DKS) continued to attract and retain athletes, who increasingly chose to shop both in-store and online. The focus on enhancing the omnichannel athlete experience, including innovative store concepts like House of Sport and Field House, contributed significantly to this growth. These stores offer interactive features and strong brand partnerships, creating a unique and engaging shopping experience.
It’s committed to maintaining its market leadership by offering trendy and unique products. The company is also prioritizing employee satisfaction and brand building. These strategies are expected to drive continued growth and long-term success.
Emeth Value Capital made the following comment about DICK’S Sporting Goods, Inc. (NYSE:DKS) in its Q2 2023 investor letter:
“For as often as the phrase “a private equity approach to public markets” is repeated, it is surprising to observe the great divide that exists between even very sophisticated long-term investors in public and private markets. There is perhaps no more well-trodden battleground than that of valuation marks. Public investors, particularly in times of market stress, are quick to express frustration that private equity portfolios are not marked to market. The title of Cliff Asness’ recent opinion piece in Institutional Investor captures the sentiment well, “Why Does Private Equity Get to Play Make-Believe With Prices?”. The level of discontent is surprising for two reasons: first, the difference in methodology is quite easily understood, and second, contrary to public markets gospel, it is evident that liquidity and the discovery of value are in no way synonymous. Indeed, they may be opposing forces more often than not. At the risk of oversimplifying, one can think of private equity marks as single-variable valuations, while public equity marks are dual-variable valuations. Both incorporate the level of earnings in a business, but while multiples are held relatively constant in private equity marks, public market marks also incorporate sentiment in the form of a changing multiple. The problem is that Mr. Market tends to change his opinion quite often. Consider the case of one of our former portfolio companies, DICK’S Sporting Goods, Inc. (NYSE:DKS)…” (Click here to read the full text)
1. Nike Inc. (NYSE:NKE)
Average Upside Potential: 16.68%
Number of Hedge Fund Holders: 66
Nike Inc. (NYSE:NKE) is a global athletic apparel and footwear company. While it is not a major player in the golf equipment market, it offers a wide range of golf apparel and footwear, including shoes and clothing designed for comfort and style on the course. Its golf products are associated with high-profile golfers like Rory McIlroy and have garnered attention for their quality and performance features. However, the primary focus remains on other sports such as basketball, running, and soccer.
It continues to innovate and attract customers with new product launches and strategic partnerships. Recent collaborations with NIGO, Patta, and Isabel have expanded the brand’s appeal to diverse consumer segments. While North American revenue declined, growth in China and the Asia Pacific and Latin America (APLA) region helped offset this.
In FQ1 2025, its revenue declined 10.43% year-over-year, even though the company still generated $11.59 billion in quarterly revenue. It experienced a 13% decline in D2C revenue due to challenging economic conditions, including high interest rates and inflation, which have reduced consumer spending power.
Although the company ceased production of golf clubs in 2016, it has strategically focused on dominating the golf apparel market, offering high-performance clothing and footwear designed for optimal comfort and functionality on the course. As of 2024, it has launched several new products, including the Air Jordan Golf Mule and the Air Max 1 ’86 OG G, which blend style with performance.
Nike Inc. (NYSE:NKE) is a consumer favorite for its high-quality athletic wear. While its sales may come across as saturated, its consistent performance is an implication of its loyal and solid customer base. Despite recent challenges, it remains a strong long-term investment. The company’s iconic brand, strong customer loyalty, and innovative product pipeline position it well for future growth.
Coho Relative Value Equity Strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“While we believe each of those companies is performing in line with or better than our expectations and that the moves lower are unjustified, both CVS and NIKE, Inc. (NYSE:NKE) reported disappointing performance in recent results. For Nike, the company reported mixed fourth quarter Fiscal 2024 results and weak Fiscal 2025 guidance, reflecting top line pressure from lifestyle product slowing, lower digital sales and increased macro headwinds in international markets. To manage through the decline in sports footwear and apparel demand, the senior leadership team is focused on cutting costs and reinvesting in marketing and innovation to drive sales. The company is starting to see green shoots for performance product innovation and has historically emerged stronger from these downturns due to benefits from a leading market position and scale.”
While we acknowledge the growth potential of NKE, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NKE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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