The popularity of sports in America has seen a resurgence recently as a result of several social and economic factors. A recent report estimates the market cap of pro sports in North America to reach $73.4 billion by 2019. When you combine that with over $47 billion in sporting goods store sales in the US, you begin to get an idea of just how massive the total market for sports is in the U.S. Pro sports are more popular than ever, and some of the best sports stocks are in companies that look to take a bigger bite out of that market in 2019. The sports industry alone accounts for a huge amount of market capitalization and revenues, but a recent trend has been highly beneficial to the pro sports industry in the U.S.
The wide-spread legislation and legalization of sports betting across the country is disrupting a black market industry and slowly dragging an estimated 80 billion dollar market into the light. Eight states have already legalized sports betting, and legislation is pending in 29 other states and the District of Columbia. As a result, sports betting stocks are getting more and more attention from investors as legalization sets the stage for a bonanza of growth in public companies operating in the space.
With the widespread popularity of pro sports and more active Americans in the market for sporting goods than ever before, there are plenty of opportunities to see nice gains in sports stocks. The sector has a variety of segments and specialized companies that provide plenty of investment angles to explore. Here are some of the best sports stocks to explore going into 2019:
The Best Sports Stocks
Disney ( NYSE: DIS ) Disney is the parent company of ESPN, so they have a huge presence in the sports media and advertising industry. They have broadcasting agreements with pro leagues and the NCAA, so they have great exposure across the sector. Additionally, the company is introducing a streaming media service that’s set to launch in 2019, Disney+. This will bolster Disney’s already sizeable commitment to streaming media and compliment the company’s ownership in Hulu, which reached 60% with Disney’s acquisition of 21st Century Fox’s entertainment and media assets. ESPN is sure to figure someway into the companies new offerings so sports will undoubtedly play a big role in the service’s potential success.
World Wrestling Entertainment ( NYSE: WWE ) Pro wrestling has continued to increase in popularity, assumably due in part to its popularity amongst millennials. The stock has exploded as of late, quadrupling after years of being stuck in a low double-digit trading range. WWE has been steadily growing its international profile over the past few years, and they recently came to an agreement to broadcast their mainstay programs, Raw and Smackdown, in Greece. Look for a rating boost in late 2019, as the company will begin airing Smackdown on Fox primetime in September of this year.
Sports Apparel Stocks
Lululemon ( NASDAQ: LULU ) Lululemon has been a pioneer in performance sports apparel products since the company was first founded in 1998. Lulu started out making high-quality ‘athleisure’ apparel for women, but recently they have benefited revenue growth significantly by expanding their offerings to include products for men. They operate 404 corporate stores across 12 countries, and they also maintain direct-to-consumer sales channels. The future looks bright for the company, as performance athletic apparel continues to be in vogue.
UnderArmour ( NYSE: UAA ) Though the company has been dysfunctional in past years, an executive shakeup and few policy shifts have some traders on The Street betting that UnderArmour is ready to turn its act around. CEO Kevin Plank is in the process of restructuring the company’s operations to cut costs and address inventory mismanagement. While the plan has already begun gaining traction and investor sentiment is approving, the company’s domestic growth has stalled in recent years and they’re facing stiff competition from big-time players like Nike ( NYSE: NKE ). There may be more turmoil in store for this stock but, if UnderArmour cleans up its act, you could see some big gains if the stock gets back up near its all-time high.
Sports Betting & More
The Stars Group ( NYSE: TSG ) The parent company of the digital poker platform PokerStars, TSG is in the process of expanding its operations in the wake of last year’s Supreme Court decision. With licenses or approvals to operate in 21 jurisdictions worldwide, it already has a strong foundation on which to build its sports book operations. The stock has been beaten up in recent months but is showing signs of bottoming-out as of late and, if it regains its prior highs, you could see some nice gains if you start building a position now.
Churchhill Downs ( NASDAQ: CHDN ) Americans have been “playing the ponies” for a long time, but the recent frenzy of gaming legislation has Churchill Downs looking for opportunities to take a bite out of the newly legitimized market. The company has an online wagering business, called TwinSpires, that is expected to see increased revenues as a result of sports wagering expansion across the country. The stock has been volatile as of late, but it still has an attractive P/E ratio of around 18. The prospects for Churchill Downs look good, and TwinSpires figures to be an increasingly important part of the company’s operations moving forward.
Paddy Power Betfair [UK] ( USOTC: PDYPF ) Fanduel and Draftkings are two up-start gaming companies that have seen a ton of publicity in the past few years. After initially considering a public offering, Fanduel was eventually acquired in a deal with UK sports-betting titan Paddy Power in 2018. The two companies merged the U.S. based businesses and are now looking to make U.S. sportsbook a priority. The stock has struggled as of late, but if the growth prospects for their U.S. businesses begin to show promise the stock’s woes could dissipate quickly.
The Bottom Line
Sports continue to be a passion for many Americans and the sports business continue to benefit as a result. If sports betting becomes anywhere near as popular as pro sports, sports betting companies stand to benefit greatly. Gaming companies are scrambling to position themselves for market share in the relatively new sports-betting market, but the companies that have experience and existent wagering infrastructure look poised to take the lead in the rapidly developing market. The wave of streaming services launching next year seems also to benefit pro sports and their continued popularity. If you believe in this industry’s potential for growth and you’re looking to make an investment, these sports stocks are a great place to start.
Are you investing in any sports stocks? Leave a comment below with a few of your favorite.