The sports and athletics market is expected to grow as a result of improved health awareness and government initiatives, while the industry is positioned to survive a potential downturn as a result of rising event popularity and technological advancements.
While popular athletic footwear and apparel powerhouse NIKE, Inc. (NKE – Get Rating) has been an investor favorite for a long time, given the near-term concerns related to its financials and strict regulations impacting its business, I think Gaia, Inc. (GAIA – Get Rating), Brunswick Corporation (BC – Get Rating), and Skechers U.S.A., Inc. (SKX – Get Rating) are better positioned to capitalize on the industry’s prospects.
NKE’s shares have lost 13.7% over the past six months to close the last trading session at $102.36.
However, the stock is trading at a lofty valuation. Its forward EV/Sales multiple of 2.94 is 148.1% higher than the 1.18 industry average. Also, its forward Price/Sales multiple of 2.91 is 230.4% higher than the industry average of 0.88.
In addition, NKE reported disappointing fourth-quarter results. The company’s net income came in at $1.03 billion, down 28.4% year-over-year. Also, its EPS decreased 26.7% year-over-year to $0.66. So, it could be wise to wait for a better entry point in NKE.
On the other hand, according to Allied industry research, the sports apparel industry is expected to reach $410.8 billion by 2032, rising at a CAGR of 6%. Sports apparel is gaining popularity in emerging markets as the purchasing power increases. Also, increased consumer acceptance of fitness activities such as aerobics, swimming, jogging, and yoga drives market expansion.
Also, the global athletic footwear market is expected to reach $180.20 million by 2031, with a 4.6% CAGR. This expansion can be attributed to a variety of factors, including increased engagement in sports and fitness activities, increased health consciousness among individuals, and the emerging trend of athleisure apparel.
With these favorable trends in mind, let’s delve into the fundamentals of the three best Athletics & Recreation stocks, beginning with number 3…
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