3 Sports Focused Stocks Set To Pop This Fall

Summer might be nearing an end, but things aren’t cooling down for sports sector companies, especially with kids headed back to school and people starting to get an early jump on their holiday shopping.

K-12 back to school spending is projected to jump 8% year-over-year to $29.5 billion, according to a National Retail Federation survey. College back to school spending is expected to reach $54.1 billion up from $48.5 billion in 2016. The staggering figures are due in part to a rise in college enrollment.

On top of that, overall U.S. retail sales during the holiday season are expected to grow by 3.1%, while e-commerce sales are projected to skyrocket 16.6% according to an eMarketer report published last week.

Today, we’re here to look at sporting goods and sports apparel companies with exposure in the back to school shopping market and the newly lengthened holiday shopping season.

Adidas AG (DE:ADSGN) (ADDYY)

Adidas AG (OTC:ADDYY) is currently a Zacks Rank #1 (Strong Buy). The German sportswear powerhouse with a market cap of $45 billion has experienced a strong 2017, and it is coming off a particularly solid second-quarter earnings report.

The sportswear giant, which also owns Reebok, saw overall quarterly revenues skyrocket 19% year-over-year to €5.038 billion, or $5.950 billion. Adidas attributed much of its growth to double-digit increases in its running sector. But maybe, more importantly, its “Adidas Originals” and “Adidas Neo” sales rose substantially.

Adidas’ sales in greater China and North America, which the company cited as key areas, jumped by 28% and 26%, respectively.

The company’s strong first half of 2017 prompted it to increase its financial outlook. Adidas now expects full-year fiscal 2017 sales to increase between 17% and 19%, up from previous projections of 12% to 14% growth.

Jefferies analyst Randal Konik downgraded Nike (NYSE:NKE) stock on Monday, based partly on Adidas’ rise in North America. Konik noted that Adidas grabbed 44% of the secondary shoe market from Nike since January 2015 and stole some of Nike’s running sector dominance as well. He also noted that traffic to Nike’s website has slipped, while Adidas’ website has added visitors.

Konik pointed out that Adidas’ move into fashion-forward looks and lines, including partnerships with Kanye West and Pharrell Williams, has served the company very well in terms of slowly eroding Nike’s U.S. dominance in the “cool” department.

Shares of Adidas have skyrocketed from $76.69 a share in early January to rest at $111 per share on Tuesday morning, which is roughly $7 below its 52-week and all-time high that Adidas reached after its second-quarter results were released earlier this month.

Johnson Outdoors Inc. (JOUT)

Johnson Outdoors (NASDAQ:JOUT) is a Zacks Rank #1 (Strong Buy) and scored an “A” grade for Value, Growth, and Momentum in our Style Scores system.

The Racine, Wisconsin-based company, whose market cap sits at just over $620 million, makes everything from scuba diving equipment to camping gear. Johnson Outdoors’ forward P/E is currently 17.78, compared to 19.00 for the industry as a whole, and the company is also coming off record-high third-quarter earnings.

The company reported that its net sales soared by 11% to $155.3 million. Johnson Outdoors successfully introduced new finishing products that helped lead to 18% growth in its all-important fishing sector, which accounted for $104 million in quarterly revenues.

Johnson Outdoors’ diving equipment sales grew by 17%, which was also spurred by new products. However, slow kayak sales led to lower growth in its watercraft segment.

The outdoor company sells many big-ticket items that are often reserved for the holiday season, and warm weather could potentially boost sales in the outdoor recreation sector overall.

Shares of Johnson Outdoors have climbed from $37.22 a share since early January to sit below its new 52-week and all-time high of $64.39 per share.

Callaway Golf Company (ELY)

Callaway Golf (NYSE:ELY) is a Zacks Rank #2 (Buy) and sports an overall VGM grade of an “A.” The golf company’s current market cap rests at $1.23 billion, and the golf equipment giant is also coming off a strong second-quarter earnings report.

Callaway’s net sales jumped by 24% year-over-year to $305 million, while operating income skyrocketed an eye-popping 135% to $49 million. The maker of golf equipment, including drivers, irons, and more saw its woods sales climb by 64%.

Due to the Carlsbad, California-based company’s better than expected quarter, management upped its full-year fiscal 2017 revenue guidance to between $980 million and $995 million. Callaway also upped its non-GAAP earnings per share guidance to between $0.40 a share and $0.45 a share, compared to previous projections of $0.31 a share to $0.37 a share.

The golf season never ends for many golfers around the U.S., especially in golfing hubs such as Arizona, Florida, and California. Callaway is also set to get another major boost from its $125.5 million, all-cash acquisition of up-and-coming golf and lifestyle apparel company Travis Mathew, which was officially announced on Monday. Travis Mathew is projected to post between $55 million to $60 million in full-year 2017 revenues.

Travis Mathew grew into a viable brand through social media-focused gorilla marketing. "We are excited to have completed this acquisition," Callaway CEO Chip Brewer said in a statement. "We believe Travis Mathew fits well with our business, brand and culture and aligns with our strategy of developing growth in areas tangential to the golf equipment business.”

Shares of Callaway have been a bit up and down in 2017, but overall the company’s stock price has increased and currently rests just below its new 52-week high of $13.70 that it reached earlier this month.

Zacks' 10-Minute Stock-Picking Secret

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month. Learn the secret >>