We recently compiled a list of the 10 Best Sporting Goods Stocks To Invest In Now. In this article, we are going to take a look at where DICK’S Sporting Goods, Inc. (NYSE:DKS) stands against the other sporting goods stocks.
The sports industry typically generates millions of dollars through events, promotions, and endorsements. It is one of the few sectors that continued to prosper, even during the pandemic. The global sporting and athletic goods market is projected to grow significantly, driven by consumer health awareness and rising demand for fitness products. The market value reached $52.02 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 3.2% through 2032, due to innovation in sporting technology and materials. Sports stocks have climbed more than 10% year-to-date, pushing the sports index of the broader market to its highest level since July of last year.
The market has experienced a sudden increase in demand as it recovers from the pandemic. The pandemic initially disrupted the market with postponed events like the Olympics and supply chain challenges. However, increased consumer awareness around fitness and health post-pandemic has further fueled the global demand for sports and sporting goods.
This growth in demand has varied across regions. Western Europe and Asia Pacific have been at the forefront of the sales recovery, while Latin America has maintained its impressive growth momentum. North America also achieved steady progress, building on its previous year’s performance. Looking ahead, Latin America and Southeast Asia show the greatest potential, with growth rates of 22% and 11%, respectively, in 2023. Meanwhile, although China rebounded after a challenging 2022, analysts remain cautious about future growth due to ongoing economic difficulties.
Global economic challenges, such as high inflation and uncertainty, are shaping consumer behavior. Rising prices are a top concern for consumers worldwide, affecting purchasing power and brand loyalty. Despite these challenges, sports participation is increasing in some regions, particularly in activities that are accessible, social, and less time-consuming. For instance, customer preference for pickleball and paddle tennis has increased by 159% since the pandemic. As consumer preferences evolve, companies are adapting their strategies to cater to different demographics, particularly the expanding older population.
Rising Demand for Sustainable Sporting Goods
One of the key trends in this industry is the increasing preference for sustainable sporting goods. Despite economic pressures, many consumers are willing to pay 9.7% more on average for products that have a positive environmental impact. Legislation is also playing a big role in driving sustainability. Laws like the U.S. Inflation Reduction Act and the EU Green Deal are pushing investments in green energy and sustainable solutions, including in sporting goods. The EU’s Ecodesign for Sustainable Products Regulation and Waste Framework Directive are setting stricter standards for product design, recyclability, and end-of-life management. Moreover, regulations like the EU Corporate Sustainability Reporting Directive are increasing the pressure on companies to be transparent about their environmental and social impacts.
To address these challenges and capitalize on emerging opportunities, more than 80% of sporting goods companies, both large and small, are adopting ambitious sustainability goals like CO2 reduction targets. By adopting sustainable practices, companies can not only benefit the planet but also boost brand reputation and attract eco-conscious consumers. With this context in mind, let’s take a look at the best sporting goods stocks to invest in now.
Our Methodology
We analyzed multiple stock screeners and ETFs to compile a list of the best sporting goods stocks. From this list, we identified the 10 stocks most favored by elite hedge funds as of Q3 2024. The hedge fund sentiment data was obtained from Insider Monkey’s database of 900 funds. The best sporting goods stocks have been ranked in ascending order of the number of hedge funds holding a stake in them.
At Insider Monkey we are obsessed with 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).
A customer in a specialty concept store wearing a full outfit of apparels and sports gear.
DICK’S Sporting Goods, Inc. (NYSE:DKS)
Number of Hedge Fund Holders: 35
DICK’S Sporting Goods, Inc. (NYSE:DKS) is a prominent American retailer specializing in sporting goods as well as camping and hiking gear and picnic supplies. The company has over 800 stores along with a strong online platform. With the availability of its products across different channels, the company holds the position of the leading omnichannel sporting goods retailer in the United States.
According to DICK’S Sporting Goods, Inc.’s (NYSE:DKS) Q3 2024 results, its net sales were up 0.5% to $3.06 billion and its gross margin expanded by 67 basis points to 35.8%. Comparable sales increased 4.2%, driven by growth in average ticket and transactions. The company also raised its full-year 2024 guidance, expecting comparable sales growth of 3.6% to 4.2% and earnings per share between $13.65 and $13.95, showing confidence in its business plans.
DICK’S Sporting Goods, Inc. (NYSE:DKS) is focused on international growth, with plans to open new stores and expand its online presence. Its efforts include in-store initiatives like the Field House concept and digital tools such as the GameChanger app to improve the customer experience. These strategies position DICK’S Sporting Goods, Inc. (NYSE:DKS) to stand out from its competitors.
The company is reshaping sports retail by building strong brand partnerships and communities. Their “Health of Sport” concept is designed to meet the needs of all athletes, covering both performance and lifestyle. In Q3, DICK’S Sporting Goods, Inc. (NYSE:DKS) opened three House of Sports locations, bringing the total to nineteen ahead of the holiday season. In 2025, the company plans to open around six Health and Support locations and is on track to have 75 to 100 locations open by 2027.
In 2025, the company plans to open around twenty Fieldhouse locations. The Texas market is seen as a key growth opportunity, and DICK’S Sporting Goods, Inc. (NYSE:DKS) is investing in new health support locations, marketing, and infrastructure to improve the omnichannel experience for athletes and take advantage of this potential. This quarter, they started construction on a new distribution center in Fort Worth, Texas, which is set to open in early 2026.
Overall DKS ranks 5th on our list of the best sporting goods stocks to invest in now. While we acknowledge the potential of DKS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DKS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
