Finding four sports-related stocks to buy is difficult. Finding 16 is near impossible. I honestly thought I'd have a hard time picking four sports stocks a week for an entire month, but this is my third of four installments and I like all of them. There's quite a bit of value here and that's taken me by surprise. Here are four stocks for the sports enthusiast.
IN PICTURES: 8 Money-Saving Tips For Sports Fans
Micro Cap - Sturm, Ruger & Co. (NYSE:RGR)
The company's history making guns dates back 61 years to 1949 when William Ruger began producing firearms in Southport, Connecticut. Although it ran into difficulties in 2005, it never stopped making money and today it's extremely healthy. Revenues in 2009 were a record $271 million producing $27.5 million in net income. For the first six months of the year, RGR's revenues were flat compared to a year earlier while earnings per share came in 12% higher at 85 cents. Analysts currently estimate 2010 full-year earnings will be $1.25 a share. To do so, it would have to produce second half earnings of 40 cents per share. Considering the company did 68 cents in last year's second half, I have a hard time believing they'd drop by 41%. I'd guess 2010 earnings would be at least $1.37 a share. At today's prices, that's a forward P/E of 9.8. With no debt and $3.05 a share in cash, you have very little downside.
Small Cap - Speedway Motorsports (NYSE:TRK)
Bristol Motor Speedway is one of many stadiums owned by Speedway, which got its start in 1959 when CEO Bruton Smith (owns 68.8% of stock) founded the Charlotte Motor Speedway. An integral part of Nascar, it's taken it on the chin the past couple of years as race attendance dwindled and advertisers reigned in spending. However, the biggest culprit for its lack of profits is its money-losing 50/50 joint venture with International Speedway (Nasdaq:ISCA) to sell motorsports collectibles. Formed in 2005, it made a colossal mistake buying Action Performance Companies for $245 million. Five years later, Speedway's investment has not performed to expectations. That's the bad news. The good news is it made money in the second quarter ($24.1 million) despite a 7.5% decline in overall revenues and it sees 2010 earnings per share of approximately $1.20. From a valuation perspective, this stock's never been cheaper. The faster it gets away from its failed joint venture, the better. Nascar will rise again. (For more on how to determine a value stock, read The 4 Basic Elements Of Stock Value.)
Mid Cap - Liberty Capital Group (Nasdaq:LCAPA)
This is one of three tracking stocks Liberty Media issued in 2006 so investors could invest in different pieces of the company while benefiting from a single corporate structure. While it's confusing when you first look at the labyrinth of businesses under of each of the three units, the move was made to help investors evaluate each of these areas while avoiding actual spinoffs. You don't see tracking stocks very often. Of the three, I picked Liberty Capital because it's the unit that owns 100% of the Atlanta Braves, 40% of Sirius XM (Nasdaq:SIRI) and a small interest in Time Warner (NYSE:TWX), which owns the television rights to the Braves. All of its assets seem to revolve around entertainment and that's a good thing. According Wedge Partners analyst Robert Routh, Liberty Capital's asset value after taking into account debt is $82 a share while its stock currently trades at almost half that amount. You're buying assets at 50 cents on the dollar; what's not to like?
Large Cap - Walt Disney Co. (NYSE:DIS)
Apple (Nasdaq:AAPL) CEO Steven Jobs is the largest shareholder of Disney (ESPN, ABC Sports) as a result of its $7.4 billion purchase of Pixar Studios in January 2006. Jobs received 138 million Disney shares for his 50.6% interest in Pixar, which he still holds today. He's made money on his shares when compared to the S&P 500. However, if he'd sold his Disney stock and bought Apple, his investment would have almost tripled. But who's counting. At the end of the day, Jobs probably enjoys the diversification the investment brings while keeping an eye on his old studio. It's a great company.
I'm shocked at the number of value stocks available in sports right now. The quality is much higher than I expected. Do yourself a favor and check some of them out. Sports can't stay down forever. (These four sports-related stocks make up the beginnings of a strong sports portfolio. For further reading, refer to 4 Stocks For The All-Cap Sports Portfolio.)
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