The Wall Street firms that we cover are starting to agree that, while the future may still be bright for the U.S. economy, despite the lurking presence of inflation, the future also may be one of stock market gains that are much lower than what we have seen over the past decade. When that is the case, then investing strategies often shift from indexing to a more disciplined stock-picking routine. That’s when investors need solid growth ideas.
Jefferies highlights its top growth stocks to buy each week, and this week is no exception. While these stocks are better suited for investors that have a somewhat higher risk tolerance, they all have outstanding upside potential and make good sense now. Plus, given the product lines and services of the companies, they should hold up better into a stiff sell-off.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Interest in golf has returned in 2021, and this is a premier way to play the industry. Callaway Golf Co. (NYSE: ELY) engages in the manufacture and distribution of golf equipment and accessories. It operates through the following segments.
The Golf Clubs segment comprises Callaway Golf woods, hybrids, irons and wedges; Odyssey putters, including Toulon Design putters by Odyssey; and packaged sets and sales of pre-owned golf clubs. The Golf Balls segment designs, manufactures and sells Callaway Golf and Strata golf balls.
The Gear, Accessories & Other segment consists of soft goods products, such as golf apparel and footwear, golf bags, golf gloves, travel gear, headwear and other golf-related accessories, as well as retail apparel sales from the firm’s joint venture in Japan, and OGIO branded products.
Jefferies loves the setup of the company:
The company raised its third quarter and fiscal year sales and adjusted EBITDA guidance, reflecting a shift in production from Vietnam, better-than-expected results in Topgolf as well as apparel brands, and a deferral of certain planned operating expenses. We highlighted two key positives that add confidence to our bullish view:
1) Topgolf saw outperformance from both walk-in and events in spite of the Delta variant.
2) The company is seeing outperformance in Jack Wolfskin, which we noted has the opportunity to alleviate a lingering EBITDA headwind. We updated our fiscal year sales and adjusted EBITDA estimates to $3.094 billion and $390M million up from $3.055 billion and $360M million.
Jefferies has a $49 price target on Callaway Golf stock. The Wall Street consensus target is just $40.00, and Wednesday’s closing share price was $30.09.