Head Outdoors for These 6 Fitness and Sportswear Stock Picks

While the pandemic has brought many indoor activities to a halt, it has also increased interest in many outdoor activities. The work-from-home trend has also boosted consumer demand for activewear and sports equipment. Here, several leading investment experts and contributors to MoneyShow.com review some favorite ideas in fitness, camping and sporting goods. Harry Domash, Dividend Detective Big 5 Sporting Goods operates more than 400 sporting goods stores in the western U.S. selling value-priced merchandise. Slow to respond to online competition, sporting goods stores, including Big 5, underperformed the overall market in recent years. But last year, Big 5's management, spurred by activist investors, embarked on a program to aggressively manage expenses, while improving merchandise selection as well as pricing and promotional strategies. It's working. Despite the coronavirus inspired shutdown of last summer's team sports and back to school markets, Big 5's September quarter revenues soared 15%. That wasn't all. Earnings came in at $1.31 per share, $0.21 above forecasts and up from year-ago $0.30. If fact, it was Big 5's all-time strongest quarter, in terms of sales, earnings, and of most importance to dividend investors, operating cash flow, which totaled $3.84 per share. Those strong results enabled Big 5 to completely pay off its long-term debt. In fact, it ended the quarter with a cash balance of $55 million. Those strong balance sheet numbers encouraged Big 5 to double its quarterly dividend to $0.10 per share, bringing yield up to 4.3%. What's next for Big 5? Same-store sales in October rose 15%. Thus, so far, there has been no slowdown from the September quarter's growth rate. Even before the pandemic, analysts were noting increasing interest in fitness and recreational sports amongst the general population, which bodes well for Big 5's longer-term outlook. One final note: currently, only one analyst is following Big 5. So, there's upside potential should additional analysts discover the stock. Briton Ryle & Jason Williams, The Wealth Advisory Founded as a tackle shop back in the 1940s, Dick's Sporting Goods has grown from that one original store to a nationwide chain of 726 stores (and counting). It's the largest omnichannel sporting goods retailer in the U.S. And it's had a great year that looks like it'll only be getting better. While most of the U.S. retail industry was on life support, Dick's reported its highest quarterly sales figures in history. The reason: People were re-experiencing the outdoors. And that's a trend we can see continuing even after Covid-19 is no longer an issue. Dick's spent the past few months beefing up its online options for e-commerce. And it's adding 9,000 new employees to help with curbside pickup at its 700+ stores across the country. Dick's is far more than just equipment you need to play sports. It's a lifestyle store for people who enjoy being active. From fishing, hiking, camping, Dick's has all the gear you could possibly need. This is a short-term play on the potential for more lockdowns and more social distancing driving more people back into the outdoors for recreation. But it's also a long-term play on a solid company with a track record for raising dividends that's coming into a sweet spot for growth and customer acquisition. Any way you slice it, Dick's looks like a perfect fit for our portfolio. Mike Cintolo, Cabot Top Ten Trader In the six years before Covid, Deckers Outdoor grew its earnings per share by 18% annually, thanks to a great selection of top-quality footwear, including UGG boots, Teva sandals, Sanuk comfy shoes and HOKA athletic shoes. Moreover, Deckers has several interesting catalysts. The first is its HOKA line, which is debuting the $250 TenNine Hike GTX next month; it's a premium hiking boot whose technology is said to be groundbreaking. It was tested for 1,300 miles and more than one thousand hiking hours, and is expected to vastly improve comfort for day hikers as well as backpackers. It's not changing the world, but Deckers is a well-managed outfit that should see accelerating growth going forward. Yeti has become the go-to brand for best-in-class drinkware, coolers and other equipment (41% of revenue), allowing millions of consumers to keep their beer or wine cold at the beach or coffee hot while on the go. Its brand and distribution is second to none -- plus, the market opportunity has expanded from niche hikers and campers 10 years ago to just about everyone who enjoys a nice beverage today. Growth probably will cool off some going forward, but longer-term, the sky's the limit, especially as Yeti's products become popular for gifts (the holiday season could be big) and as the company expands internationally. It won't be a lightning-fast growth story, but big investors are betting Yeti is a new dominant brand that will produce dependable 15% to 20% growth for many years to come. It's a solid story. Bruce Kaser, Cabot Undervalued Stocks Advisor Columbia Sportswear produces the highly recognizable Columbia brand outdoor and active lifestyle apparel and accessories, as well as SOREL, Mountain Hardware, and prAna products. For decades, the company was successfully led by the one-of-a-kind Gert Boyle, who passed away late last year. The Boyle family retains a 36% ownership stake and Gert's son Timothy Boyle remains at the helm. Columbia reported disappointing third-quarter results, with adjusted earnings per share down about 46% from a year ago and about 25% below the consensus estimate. Revenues fell 23% and were about 9% below estimates. Adding to investor frustration, the company's fourth-quarter outlook was discouraging: sales were guided to about 2% below consensus estimates and earnings were guided to about 20% below consensus estimates. The shares fell sharply on the news. The company said that orders continued to strengthen in the fourth quarter, raised its cost-cutting goal to $100 million this year and announced the retirement/replacement of its chief operating officer and other senior operations executives. Columbia's balance sheet remains solid, holding $315 million in cash and no debt, providing it with considerable financial flexibility. Columbia's long-term earning power appears unimpeded but is being pushed out into the future. Also, we think the company is being exceptionally conservative with its forward guidance, given the wide range of uncertainties and the danger that another significant miss would more severely damage their credibility. The shares recently traded at 21.1x estimated 2021 earnings of $3.77. We recommend the stock in our buy low opportunities model portfolio. Jim Woods, The Deep Woods The Global X Health & Wellness Thematic ETF seeks to harness the effects of changing consumer lifestyles by investing in companies geared toward promoting physical activity and well-being. The fund aims to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global Health & Wellness Thematic Index. BFIT enables investors to access high-growth potential through companies at the leading edge of a long-term, health and wellness trend affecting multiple sectors of the global economy. Composition of the ETF transcends classic sector, industry and geographic classifications by tracking an emerging theme. In a single trade, BFIT delivers access to dozens of companies with high exposure to the health and wellness sector. Only 41% of the fund's portfolio is invested in U.S. companies. BFIT's other holdings are in foreign emerging markets. This strategy reflects that many industry powerhouses are based elsewhere. For example, Puma SE and Adidas AG are headquartered in Germany; Shimano and Asics Corp. are in Japan and Fila Holdings Corp. is in South Korea. This exchange-traded fund provides diversification domestically and across the globe. Better yet, no individual stock represents more than 4% of the portfolio. The fund has $19.6 million in assets under management, a 0.35% average spread and 58 holdings. The fund has been growing steadily since its inception in May 2016. It is up more than 50% since then, and with an increasing interest in healthy living and general wellness, the fund looks poised to continue growing higher. Health and wellness crosses the sector boundaries found in traditional classification systems to include nutrition and weight loss, nutritional supplements, fitness equipment and apparel, among others. BFIT has a high expense ratio (0.75%) in comparison to other exchange-traded funds and, as a health and wellness fund, has a very different investment strategy than others in this segment. I urge interested investors to exercise their own due diligence in deciding whether this fund fits personal portfolio goals and risk tolerance.

Head Outdoors for These 6 Fitness and Sportswear Stock Picks

Leading investment experts discuss their favorite ideas in fitness, camping and sporting goods.

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