It’s been a long time since I’ve played basketball or any other sport with another human.
Because of COVID-19 lockdowns, a majority of folks are staying inside or moving in limited circles.
“Cabin fever” is a gross understatement.
Just the other day, some neighbors and I were discussing in a group chat what we would do once we felt safe enough to return to normal.
Kayaking, basketball … even lawn darts are some of the activities my neighbors are itching to do.
And we’re like millions of others.
You see, once lockdowns are lifted and we have a vaccine for COVID-19, we’re going to find the first basketball court, track or baseball field … and do it.
And companies that sell sporting goods will see a massive boom in sales as we open our doors, smell the fresh, mask-less air and resume our active lives.
Using Chief Investment Strategist Adam O’Dell’s six-factor Green Zone Ratings system, I found one such company. It’s already performed well, even during lockdowns.
I’m convinced this sports stock will keep going up.
And it’s my Green Zone Stock of the Month.
One trend in sporting goods will carry this month’s pick into the stratosphere.
Our Last ‘Top Stock’ Is up 21% in a Month
My last Green Zone Stock of the Month was personal protection equipment manufacturer Superior Group of Cos. Inc. (Nasdaq: SGC).
It ranked a perfect 100 on Adam’s Green Zone Ratings system.
Since I told you about SGC less than a month ago, its share price has jumped more than 21%!
Adam’s proven system finds those stocks with uptrending momentum, solid quality and value, and sound growth potential.
And Adam’s system says our Green Zone Stock of the Month for October is another home run.
You need to understand which trend this company will capitalize on to be such a heavy hitter.
The Sporting Goods Boom Will Push Sports Stocks Higher
From 2012 to 2019, revenue for the sporting goods industry climbed.
In those seven years, revenue went from $13.3 billion to $16.1 billion — a 21% jump.
Then came the coronavirus.
Sales have fallen off in 2020 — by about 3%, according to Statista’s Consumer Market Outlook.
But I see the market making a strong rebound next year. Lockdowns will subside, and more people will head outside for their favorite activities and sports. That will be a boon for sports stocks like this.
The Market Outlook I mentioned above estimates that revenue in the sporting goods market will climb more than 25% in the next three years.
Sporting Goods’ Revenue Boom
And this company will take advantage and give smart investors like us 3X market performance over the next 12 months.
Escalade Inc. Is a Top Sports Stock
Like my English papers in high school and college, I don’t like to see any red marks when it comes to Adam’s Green Zone Ratings system.
When I look at a stock, if there’s a red mark, I dig to find out why.
But Escalade Inc. (Nasdaq: ESCA) stock shows nothing but green.
The company makes and sells a wide range of sporting equipment:
- Basketball goals.
- Archery products.
- Indoor and outdoor games (think lawn darts).
- Fitness products.
- Ping Pong accessories.
Its trailing 12 months of sales were $214 million.
What’s even better is the company has $17 million in cash and just $1 million in total debt.
Escalade Is Green Across the Board
Escalade Inc. Green Zone Rating on October 19, 2020.
As you can see, this sports stock earns a perfect 100 overall on Adam’s Green Zone Ratings system — that means no other stocks rank higher.
It’s the perfect size for what Adam and I look for — smaller-cap companies, which tend to outperform larger ones. On size, Escalade ranks a 99.
Escalade’s market value is $287.3 million.
The company has solid return-on numbers:
- Return on assets: 9.67% compared to the leisure goods sector average of minus-0.16%.
- Return on equity: 12.1% compared to the sector average of minus-6.3%.
- Return on investment: 11.8% compared to the sector average of 2%.
That earns Escalade a rank of 99 on Quality.
It’s also in the green the remaining factors we look at:
- Momentum: 99 — Take a look at its share price chart below.
- Value: 93 — Excellent price-to-book, price-to-cash flow and price-to-earnings ratios, especially compared to the leisure goods industry.
- Volatility: 86 — The stock comes with low volatility.
- Growth: 84 — Strong earnings-per-share growth.
Its stock chart is impressive:
Escalade Share Price Jumps 337%
This sports stock is on a tear since it hit a low of $4.65 back in April.
And it shows no signs of slowing down. This is where momentum comes in.
We like to see stocks that are already in an uptrend, and Escalade fits that bill.
It’s surged from its April low and has even reached new highs.
What You Should Do With Escalade Inc. Stock
Its ranking of 100 on Adam’s Green Zone Rating system means that we are “strong bullish” on the stock.
We see Escalade Inc. outperforming the broad market by 3X in the next 12 months.
The bottom line: Like with Superior Group, Escalade has everything we look for in a strong stock.
Remember, Superior has jumped 21% since I told you about it on September 22.
We’re beating the market by four times with Superior!
With the expected climb in sporting goods sales over the next three years, Escalade is in a perfect position to capitalize and grow its sales … as well as grow its returns for investors.
Smart investors like you see these trends and know when to jump in.
For Escalade, we should jump in now to realize 3X profits above the market.
Until next time…
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.