A strong earnings report from Nike (NKE) Tuesday night was due in part to demand for leisure/athletic clothing for stay-at-home workers. Sporting goods have also benefited from a transition to new activities for those that have been shut out of organized sports.
In addition to Nike, Dick's Sporting Goods (DKS) also had very good results and is a signal that demand in the group remains strong.
One of the smaller publicly traded sporting good chains is Big 5 Sporting Goods (BGFV) . It offers both a good technical setup and an attractive valuation.
Big Five is located primarily on the West Coast and most of its stores are smaller than the "superstore" retailers. It uses a strategy similar to TJX Companies (TJX) and offers merchandise that it can obtain at attractive prices.
The company posted an exceptionally strong second quarter, with earnings of around $0.39 per share after a one-time gain of $0.13. Expectations are for third-quarter EPS of $1.00 to $1.30. There has been unusual strength in ammunition, which may help to bolster the numbers further.
The company has no debt, is currently trading below book value of $8.40, and even pays a quarterly dividend of $0.05. The biggest knock on the company is its limited e-commerce business but that doesn't seem to be hurting it as far as sales in this environment.
Current estimates for the remainder of 2020 and 2021 look quite low.
I'm looking to accumulate BGFV shares into what should be an extremely strong third-quarter report.