Friday, June 01, 2007

Racecar Motorsports Stocks: Worth Doing a Drive-by?

Based on television ratings, NASCAR has become the second most popular professional sport in the U.S., after football and their fans are considered the most brand loyal of all sports. They also receive more advertising from Fortune 500 countries than any other sports.

Speedway Motorsports Inc. (TRK) owns several motorsport racetracks including Atlanta Motor Speedway, Bristol Motor Speedway, Infineon Raceway, Las Vegas Motor Speedway, Lowe’s Motor Speedway, Texas Motor Speedway, and North Carolina Speedway. The stock has a P/E of 16 and a PEG of 2.3. They even pay a small yield of .8%. They recently reported an earnings drop of slightly over 1% on a minimal .7% revenue increase.

Dover Motorsports Inc. (DVD) is a Delaware based company that owns and operates Dover International Speedway in Dover, Delaware; Gateway International Raceway near St. Louis, Missouri; Memphis Motorsports Park in Memphis, Tennessee; and Nashville Superspeedway near Nashville, Tennessee. Although they are generating negative earnings, they have a forward P/E of 32 and they pay a yield of 1.1%. The hedge fund Marathon Partners L.P., founded by Mario D. Cibelli, owns 500,000 shares of the company and has written a letter to the Board of Directors urging them to sell the company.

The Daytona Beach, Florida company, International Speedway Corp. (ISCA), owns and operates several motorsports racetracks in Florida, Alabama, Arizona, California, Kansas, Michigan, New York, South Carolina, and Virginia. The stock has a P/E of 25.7 and a PEG of 2.2. They just increased their annual dividend by 25% which they have paid since for 34 consecutive years. The company just had its credit ratings increased from BBB- to BBB by Standard & Poor’s.

A very low market capitalization and therefore highly speculative stock, DIRT MotorSports, Inc. (DMSP.OB), operates several dirt motorsports tracks in New York, Florida, and Pennsylvania. In spite of the fact that their revenues were up over 22%, their earnings and cash flow are negative.

Another low cap stock, Interactive Motorsports & Entertainment Corp. (IMTS.OB) owns and operates NASCAR Silicon Motor Speedway racing centers. Earnings and cash flow are negative.
A third microcap, American Racing Capital, Inc. (ANRC.OB), designs and purchases motor sports racetracks. Negative earnings and negative cash flow.

To round out the microcaps, there is Dale Jarrett Racing Adventure Inc. (DJRT.OB), which provides raceway type driving schools for individuals and corporations. Negative earnings.

Author does not own any of the above.

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