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March 20 is the first day of spring. Not only does the spring equinox usher in longer days, it also signals the start of the 162-game Major League baseball season. It makes me think of which sports stocks to buy and sports stocks to sell before the upcoming summer season.
These companies benefit from our love of baseball, football (both American and international versions), and hockey, Canada favorite sport. Each of these sports are big revenue generators.
The Glazer family has made a lot of money from the Tampa Bay Buccaneers and Manchester United (NYSE:MANU) professional sports teams. They would surely be fans of sports stocks.
Nike (NYSE:NKE) is one of the better sports stocks you could have owned over the past 20 years. It’s up 962% over this period, nearly triple the return of the S&P 500, despite losing 44% of its value since Nov. 2021, its all-time high.
As I said, there are sports stocks to buy and sports stocks to sell. Here are three of the latter.
Peloton Interactive (PTON)
Source: Sundry Photography / Shutterstock.com
It does not surprise me that Peloton Interactive (NASDAQ:PTON) is in penny stock territory (shares under $5) in 2024. After the company reported terrible Q4 2023 results last August, I said, “As fitness stocks go, Peloton is not your friend if you want to make money.” Its shares are down nearly 30% since. At the end of 2020, PTON shares traded above $160.
As we enter the summer, I don’t see how the company accelerates sales when most people prefer outdoor exercise, not sweating away on a stationary bike inside.
On March 11, Morgan Stanley analysts resumed coverage of Peloton with an Equal Weight rating and a $3 target price, more than a dollar below where it’s currently trading. While Morgan is confident that Peloton’s long-term potential remains in place, in the near term, it’s not sure the company’s strategic direction will move the needle for the company.
In February, Peloton reported Q2 2024 results that included a loss of 54-cent a share, down from 98 cents a year earlier, with revenue of $744 million, 6.2% less than Q2 2023.
It is not a quick turnaround.
Vail Resorts (MTN)
Source: Juana Nunez / Shutterstock
One of the things about ski resort operators such as Vail Resorts (NYSE:MTN) is that you live and die by the weather. In recent years, the so-called busy season between December and March has become increasingly unpredictable.
The Guardian published a March 2 article with the headline Ski resorts’ era of plentiful snow may be over due to climate crisis, study finds.
“The US ski industry has lost more than $5bn over the past two decades due to human-caused global heating, the new research has calculated, due to the increasingly sparse nature of snowfall on mountain ranges,” The Guardian’s Oliver Milman stated.
The industry has been selling season passes for decades to generate revenue ahead of time and hedge its bets against warm weather.
For the last three fiscal years (July year-end), Vail generated 61% of its lift revenue from season passes. In 2023, that was $867 million, representing 34% of its $2.54 billion in mountain revenue and 30% of its total resort revenue of $2.88 billion.
As the weather gets less cooperative, lift revenue, which is the highest segment overall, might increase due to raised prices. However, eventually, volumes will fall, affecting everything from the ski schools to dining revenue, retail, etc.
It’s a lot of risk for just 7% appreciation over the past five years.
Yeti Holdings (YETI)
Source: David Tonelson / Shutterstock.com
Yeti Holdings (NYSE:YETI) designs, distributes and retails outdoor products such as coolers, backpacks, bags, drinkware, etc. The company is seeing its stock down 66% from its Nov. 2021 all-time high, around $108.
In February, it reported Q4 2023 results, which included a 6% increase in adjusted net sales to $519.8 million. It also generated a net profit of $78.6 million, up from a $27.7 million loss a year earlier.
What’s the problem? Or, more importantly, why is YETI stock down 27% in 2024?
Its adjusted earnings per share of $0.90 fell six cents shy of the analysts’ estimate, while revenues were short of the $536 million consensus. Further, its 2024 EPS guidance is for $2.48 at the midpoint which is 20 cents shy of the consensus on Wall Street.
Nothing in its year-end financial data suggests its business is in dire straits. Even analysts are mixed about it. Of the 17 covering it, only six rate it a Buy with a target price of $44.00, 20% higher than its current share price.
However, if it reports Q1 2024 results in May that are lower than expected, its stock could revisit $28, where it traded in Sept. 2022.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
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3 Sports Stocks to Bench Before the Summer Season
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