It’s generally regarded as a good investment strategy to hold stocks across a wide array of industries. You’ll regularly hear financial gurus discuss the need to invest in technology, health care, education and energy, but what about sports?
When you study the sports apparel and equipment industry, it seems fairly obvious that there are some real winners, but which stocks are truly worth buying and holding? Take a quick look.
Under Armour
A lot of people have grown bearish on Under Armour (UA, Financial), but don’t be quick to write this stock off. Shares have fallen considerably over the past year (and even more in the past three years), but there’s still a lot to like here.
For starters, the company’s made solid investments in player sponsorships. Lining up Jordan Spieth has been key. (Golf has arguably never been more popular, professionally as well as among amateurs.) Under Armour has also signed Steph Curry, Tom Brady and Cam Newton, all superstars with massive followings.
Just a few years ago, we were talking about how Under Armour had the potential to double its valuation fairly swiftly. Today the price has been slashed after losses and stagnant earnings. But the leadership and company holdings within the organization continue to suggest it has lots of potential. Get in while the getting’s good.
Lululemon Athletica
Everyone likes to talk about the big boys – Under Armour, Nike (NKE), adidas (ADS, Financial), etc. – but Lululemon (LULU, Financial) quietly continues to build momentum. The athletic and lifestyle apparel brand is arguably in a stronger financial position than better-known names like Under Armour, and it’s enjoying a three-month surge in valuation that’s not likely to slow down anytime soon. It’s going to be a steady climb, but if you’re willing to buy and hold, you may well find yourself rewarded when you look back in five or 10 years.
Walt Disney
Not everyone recognizes this, but Disney (DIS, Financial) owns the worldwide leader in sports, ESPN. When looking to the future, some speculate that this could be more of a negative than a positive. It’s been suggested that ESPN is in over its head and that an impending collapse of the cable news industry could shatter the company.
As a brand, ESPN probably isn’t going anywhere. The company will continue to have a strong grip on the sports media industry, whether that means online or via cable television.
So long as Disney continues to manage ESPN well and keeps tabs on the shifting media landscape, there’s no reason this won’t remain the stronghold it’s been for decades.
Foot Locker
The fourth stock on our list may come as a surprise, but there’s a lot to like about Foot Locker (FL). Not only are athletic shoes incredibly popular right now, but this firm has a pretty solid financial foundation with reasonable debt levels and a noteworthy record of earnings-per-share growth.
While Foot Locker has shown low-profit margins historically, this isn’t a negative factor because the recommended play is to buy and hold. Slow and steady growth is something many investors look for, and Foot Locker makes for a great choice alongside stocks that promise more ambitious anticipated growth.
Stay analytical in your approach
Few phenomena get people more riled up than sports. We have our favorite teams and brands, which can admittedly cloud one’s judgment on the investment front.
As you diversify your portfolio and accumulate sports-related stocks, try to make sure you put your allegiances on the back burner and adopt the same analytical approach you take with the rest of your portfolio. That may seem like obvious advice, but you’d be surprised how often investors fail to observe it.
Disclosure: I do not own any of the stocks mentioned in this article.
