Investing

3 Public Companies Dominating the Sports Industry

Chris MacDonald

Published: February 16, 2025 9:31 am

With the Super Bowl officially wrapped up, and the Eagles taking the mantle away from the Chiefs in an epic showdown (beat down, whatever you want to call it), many investors are turning their attention to the business of sports. An estimated $1.4 billion was wagered yesterday alone, and with the prices of tickets and concessions these days, there are clearly a number of businesses and industries benefiting from the value live sports provides to fans around the world.

Indeed, it’s the business of sports that is perhaps most appealing to me during this time of the year. The amount of money that’s wagered on major sporting events like the Super Bowl is incredible. That’s to say nothing of the various deals we hear about for sports franchises, which have officially entered eye-watering territory, even for the billionaires betting on these crown jewels.

Key Points About This Article:

• Investing in companies that provide exposure to sports in one way, shape or form has been a solid investing strategy over the long-term.
• Here are three of the top companies investors continue to flock to in order to gain exposure to this segment of the market.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

DraftKings (DKNG)

DraftKings (NASDAQ:DKNG) has seen its fair share of volatility in recent years, with the stock still roughly 50% below its previous all-time high during the post-pandemic hype cycle. That said, this is a stock that’s seen positive momentum of late, surging nearly 10% over the past month and up more than 1% on Monday following the Super Bowl.

While not yet profitable, DraftKings has reported a notable 48% annual revenue growth rate over the past five years. This growth rate has surpassed many similar companies that are not yet profitable, and it’s likely we’re going to see a company with positive earnings at some point in the next year or two, if analysts are correct. Thus, I think DraftKings could certainly see significant investor interest from those looking to pick a cash flow winner before the market catches on.

Lululemon (LULU)

Sportswear maker Lululemon Athletica (NASDAQ:LULU) has established itself as a premium athleisure brand, and this stock has done nothing but go up and to the right over the long-term. Investors in LULU stock have seen a remarkable 672% share price gain over the past decade, outperforming the S&P 500 by a rather wide margin. Much of this outperformance comes from the company’s high-margin business centered around its iconic yoga pants, which have yet to go out of style.

Lululemon has benefited from its focus on quality and innovative designs, attracting affluent customers (and those aspiring to be) to its product lines. This strong and loyal customer base has driven impressive profitability, with Lululemon posting an average five-year gross margin of 56.9%, surpassing both Nike and even Apple. Despite recent gains from better-than-expected Q3 results, its stock remains 23% below its peak.

The sports brand also demonstrated strong profitability, generating $417 million in free cash flow through fiscal 2024, despite not paying a dividend. Instead, management prioritized capital allocation through $1.3 billion in share buybacks, reducing the share count by over 3% year-over-year. Following a 23% decline from its peak, management capitalized on the lower valuation to benefit shareholders. With its premium brand status and strategic financial moves, Lululemon remains a compelling portfolio addition I think investors may want to consider right now.

Madison Square Garden Entertainment (MSGE)

Madison Square Garden Entertainment (NYSE:MSGE) is best known for its portfolio of assets including Madison Square Gardens, which the company utilizes to host its sports teams and live events. With spending on live events continuing to rise as Millennials and Gen Z consumers continue to gravitate toward experiences over goods, this is a company that’s benefited from these trends in a big way in recent years.

Analysts remain broadly bullish on the company’s prospects, with a consensus buy rating and a price target of $45.33 on the company’s shares. This price target implies upside of roughly 22% from current levels, and I think that’s a reasonable estimate of where this stock could tend over the coming year.

The company’s increasingly profitable core business has allowed MSGE’s management team to continue to reduce its share count via ongoing share repurchases, delivering value to shareholders in a tax-efficient way. And with revenue growth expected to continue with a number of positive strategic developments (particularly those around Penn Station), this is a stock I think long-term investors will want to consider on any meaningful dips this year.