Oct 28, 2020 (OTC PR WIRE via COMTEX) -- One area of the economy hit by the pandemic health crisis that may drive future gains for investors is in the ecosystem of products and services surrounding live sports events - particularly the branded products built to find the market through sponsorships or marketing delivered in that ecosystem.
You think about the fact that the pandemic has shut down some teams, games, leagues, major events, or whole seasons, and it's clear that it has implications for businesses that get paid by that industry. But it's important to also consider what else that implies - ie, the concession foods, media companies, and products that have branded identities built on the action in sporting events, including the personalities and media coverage surrounding it.
While live sports have returned, they haven't returned in full, and not with full confidence. Yet, we can be quite confident that some version of normal live sporting experiences isn't too far off in the future at this point, suggesting that stocks levered to that ecosystem may represent big opportunities going forward.
With that in mind, we take a look here at some of the most interesting names in the space, including: Under Armour Inc. /zigman2/quotes/208967132/composite UA -1.09% , Splash Beverage Group Inc. /zigman2/quotes/207197417/delayed SBEV 0.00% , and Lululemon Athletica Inc. /zigman2/quotes/204011506/composite LULU -2.39% .
Under Armour Inc. /zigman2/quotes/208967132/composite UA -1.09% has been one of the most aggressive big brands marketing through coverage of sports, with numerous major endorsement deals already in the works. The company develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America.
The company offers its apparel in compression, fitted, and loose types to be worn in hot and cold. It also provides various footwear products for running, basketball, cleated sports, training, and outdoor. In addition, the company offers accessories, which include gloves, bags, and headwear; and digital fitness subscriptions, as well as digital advertising through MapMyFitness, MyFitnessPal, and Endomondo platforms.
Under Armour Inc. /zigman2/quotes/208967132/composite UA -1.09% most recently announced plans to close all UA Brand House and UA Factory House retail locations in the United States for Thanksgiving (November 26). All U.S. retail locations will re-open to the public on Friday, November 27.
"This entire year has been unpredictable and for all of us, challenging in our own ways," said Patrik Frisk, CEO of Under Armour. "It's important to take the time to acknowledge and celebrate the wins that we've accomplished throughout 2020. For that, we're closing our stores to give our retail teammates a chance to pause and enjoy the Thanksgiving holiday before finishing out the year strong."
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.
Under Armour Inc. /zigman2/quotes/208967132/composite UA -1.09% generated sales of $706.2M, according to information released in the company's most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -23.9% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.1B against $1.6B, respectively).
Splash Beverage Group Inc. /zigman2/quotes/207197417/delayed SBEV 0.00% specializes in manufacturing, distribution, sales & marketing of various beverages across multiple channels, including TapouT sports drinks, an international lifestyle brand that has been at the forefront of Mixed Martial Arts since 1997.
MMA is the fastest growing sport in the US over the past 10 years, and there's no reason to believe that won't be the case over the next ten years. The TapouT brand is big in MMA circles and stands to benefit from a return to full action and major MMA events over coming months.
This is a more speculative stock in this basket, clearly, but it also may have the biggest upside potential over time given its early-stage profile and discounted share price. We include it here because of the company's recent major news catalyst - SBEV is expanding into the Chinese market, which is the largest alcoholic beverage market in the world (the company also sells a line of branded spirits).
Splash Beverage Group Inc. /zigman2/quotes/207197417/delayed SBEV 0.00% most recently announced that it has secured distribution and Manufacturing capabilities in Greater China for its hydration and recovery brand TapouT Performance and distribution for its brand SALT Naturally Flavored Tequila by entering into a distribution agreement with China-based American Software Capital.
According to the release, ASC will initially import and distribute TapouT and SALT Tequila beverage products in China as it works with Splash to position the Company for manufacturing capabilities over the intermediate term in order to streamline operations and maximize profitability in the region. ASC is also well-positioned to seamlessly incorporate additional brands as Splash continues to acquire and/or internally develop new brands, product lines and concepts.
"The thirst for Western brands continues to increase across Asia," commented Robert Nistico, CEO of Splash. "We believe our relationship with ASC, one of China's top manufacturers and distributors, will position Splash to capitalize on this trend. ASC has extensive relationships with top retail chains, and I'm confident this will further our advantage as we enter the Chinese market."