The most exclusive annual sporting event is taking place in Augusta, Georgia this week. The Masters Golf Tournament. Resale ticket prices start at $10,000 for a 4-day pass to this coveted tournament. The 3900% up-charge to the tickets ($325 face value) is due to the rarity. There are only 3 ways to tickets to the Masters: winning them in the lottery system (chances are not high), getting a patron badge (which requires you to make it on a list that hasn’t been open for new names since 2000), or buying them for an outrageous amount of money on the secondary market.
The biggest names in golf are going to be making an appearance at this prestigious event, but only one will get to put on the green jacket at the end of it. Favorites going into the tournament include Rory McIlroy, Dustin Johnson, Justin Rose and of course Tiger Woods.
Here are a couple of golf stocks to consider as you watch your favorite golfers round Amen Corner this week in the tournament.
Callaway Golf (NYSE:ELY)
Callaway has become a household brand in the golf community. While watching the Masters this week you’ll notice golfers like Xander Schauffele, Francesco Molinari, and Phil Michelson all sporting Callaway gear. From its origins in LaGrange, Georgia over 35 years ago to now being a multinational corporation operating in 70 countries, this company continues to grow. ELY just crossed $1 billion in revenue back in 2017 and is expected to increase that top-line figure to $1.7 billion this year. Callaway has seen margins expand quickly over the past 6 years from 30% in 2013 to the 46.5% gross margins we see today.
Callaway golf invested $70.5 million into a popular driving range chain called Topgolf which has gained a lot of traction from younger generations, turning the driving range into an experience. Callaway’s 14% stake is now worth $290 million according to those familiar with the deal.
Callaway has been expanding its portfolio to products outside of the realm of golf. They bought apparel brands OIGO, Travismathew, and just acquired Jack Wolfskin in January. These “soft goods” businesses are expected to drive a significant amount of growth for Callaway, leveraging their scale and distribution channels to do so.
This is definitely a growing stock to keep an eye on. The stock has traded down 32% since its high at the end of September. ELY has a PE to growth ratio of .63, far below the industry average of 1. This could be a bargain buy right now. ELY – Zacks Rank #3 (Hold)
Acushnet Holdings Corp. (NYSE:GOLF)
Acushnet owns the popular golf brand Titleist as well as golf shoe and apparel brand FootJoy. This company just went public at the end of 2016 and is up 35% since the IPO. A large portion of your favorite golfers will be using Titleist balls in Augusta this week with players like Jordan Spieth, Justin Thomas, and Adam Scott repping Titleist gear. GOLF is boasting net margins of over 50% and growing. Titleist Balls make up the largest segment of Acushnet’s top-line and Titleist golf clubs are the fasted growing segment, with year-over-year growth of 11% for 2018. GOLF is trading at competitive multiples for its space and has outperformed the S&P 500 over the past 2 years, as you can see below. GOLF – Zacks Rank #3 (Hold)
Golfing season is just beginning and what better way to get motivated to get out on the course then sitting back and watching endless hours of the Masters. Best of luck to everyone both on the course and on your trading platforms.
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