Some Sporting Action

 | Jul 07, 2012 | 12:35 PM EDT  | Comments
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Stock quotes in this article:

cab

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hibb

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dks

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pool

Sporting-goods stores are thriving as their own subsector within consumer discretionary, and outdoor-gear purveyor Cabela's (CAB) is a perfect example of this trend. The stock, is working on its third week in a row of upside trade as it attempts to climb out of a base that began in late April.

The company is expected to report its second quarter sometime around July 26. Analysts are eyeing income of $0.39 a share on sales of $605.51 million, which would mean increases on the top and bottom lines.

This stock can make sharp up or down moves, and it has a beta of 1.5, a reflection of its propensity toward volatile trade. In February the stock bolted ahead 36%, the result of a better-than-expected fourth-quarter results. But that optimism was reversed April 26, when the company beat first-quarter views but said Internet orders were on the decline.

Since then, the stock has been consolidating in an orderly fashion. Not only did company-specific news sent shares tumbling, but general market weakness served as a weight on shares.

On Friday, though, short-term moving averages crossed above the 50-day line as the stock advanced along with the major indices. Based on moving average support, the stock is in a buy zone at the moment. More conservative investors may want to wait for the stock to approach its previous high of $41.61. Keep in mind that recent earnings reports have resulted in big price moves in both directions, so that's a risk coming up in a few weeks.

Another sporting-goods retailer sporting a solid base area is Hibbett Sports (HIBB). It vaulted above its five-day exponential moving average on Friday and, as of Thursday's close, it was up 2.6% this week.

This stock has a history of rallying to further highs once it clears a consolidation. That's in contrast to many other stocks -- ones that tend to be most buyable amid the trend along short-term moving averages prior to making a new high, at which point they tend to top out.

Also showing good chart action is Dick's Sporting Goods (DKS), which has been consolidating mid-May. Here, too, the moving-average crossovers have been encouraging, and the stock has been getting support along its five-day line for the past week.

The company is expected to report second-quarter results in mid-July, with analysts pegging earnings at $0.64 per share on sales of $1.43 billion. That would be a 24% year-over-year gain on the bottom line, and 9% on the top line.

Also getting into the swim is pool equipment dealer Pool (POOL). The stock rallied to a five-year high of $41.27 Thursday, but reversed along with the general market to finish on the downside. For the week, the stock was up 0.9% as of Thursday's close, at $40.81. It's currently in buy range, less than 1% above its prior high of $40.46.

This is a fairly small company, with a market capitalization of around $1.9 billion. It moves about 245,000 shares per day on average. That's slightly less liquidity than I like to buy as I prefer stocks with average trading volume of at least 300,000 shares per day.

The company is set to report its second quarter sometime around July 19, so this is another case where results  -- or, as more often happens, the outlook -- could move the stock sharply in one direction or the other. Analysts see earnings of $1.35 a share on revenue of $766.53 million, up from the year-ago quarter.

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