Saturday, June 30, 2007

Take a Swing at Tennis Stocks: and Why does IBM and Ralph Lauren appear on the list

It is summer time, which means tennis fans around the world are watching the Wimbledon tennis tournament take place. Here is a trivia question: When were yellow tennis balls first used at Wimbledon? Answer: 1986. Here’s another: When was Wimbledon first broadcast on TV? Answer: 1937.

There is definitely an investment angle to Wimbledon; as a matter of fact, Wimbledon issues debentures [bonds]. The Centre Court debentures are issued in maturities of five years, and entitles the owners to one ticket for every day of The Lawn Tennis Championships during the related period and a pass to the Centre Court Debenture Holders’ Lounge. Barclays Capital Securities Limited makes a market in the bonds.

Fortunately, there are plenty of tennis stocks to choose from, and a few which may be worth taking a swing at.

Nike Inc. (NKE) the famous athletic shoe manufacturer and maker of sports apparel and equipment, has a P/E of 20 and a PEG of 1.3. It even pays a dividend of 1.3%.

Adidas AG (ADDYY.PK) makes reebok and Adidas tennis shoes. Based on its first dividend, it yields 0.1%.

K-Swiss Inc. (KSWS), which trades on NASDAQ, manufactures tennis gear and has a P/E ratio of 14.3, a PEG of 1.55, and even has a small yield of 0.7%.

Puma AG Spons. ADR (PMMAY.PK) is the German manufacturer of high quality athletic shoes and other sportswear. This stock falls into the high priced share category, selling for over $440 per share. The yield is 0.7% based on its annual dividend.

Amer Sports Cp SP AD (AGPDY.PK) is the Finnish company that owns Wilson Sporting Goods organization, which makes popular tennis racquets that have been used by Pete Sampras, Roger Federer, Serena Williams, Venus Williams, Flavio Saretta, Jack Kramer, Jimmy Connors, Chris Evert, and Steffi Graf. They have paid annual dividends in six out of the last seven years.

Head NV (HED) is a sporting goods and clothing manufacturer, well known for their tennis racquets of which about 30% of the top 100 ATP Tour players use. They are used by many tennis players such as Andre Agassi, Ivan Ljubicic, Richard Gasquet, Juan Carlos Ferrero, Gaël Monfils, Marat Safin, Svetlana Kuznetsova. The company currently has very low earnings but a P/S ratio of .31.

K2 Inc. (KTO) makes tennis racquets and clothing through its Völkl division. The stock has a P/E of 20 and a PEG of 1.34.

Dick's Sporting Goods Inc. (DKS) has over 290 sporting goods stores mostly in the eastern United States. They sell tennis equipment along with numerous other types of sports equipment. The stock has a P/E of 26.5 and a PEG of 1.22.

International Business Machines Corp. (IBM) appears on this list and you are probably wondering why. They are one of the major sponsors of Wimbledon, and their ads appear at the top of the Wimbledon home page and on every other page on their site. IBM’s P/E is 16.8, the PEG is 1.43, and the yield is 1.5%.

Polo Ralph Lauren Corp. (RL) is another company about which you may be wondering why. They are the first company in over 125 years to provide uniforms for the tournament's on-court officials, including the , the 570 umpires, ball girls and ball boys. RL has a P/E of 26, a PEG of 1.62, and a very small yield of 0.2%.
General Electric Co. (GE) owns NBC which is broadcasting Wimbledon. GE has a P/E of 19, a PEG of 1.64, and a yield of 2.9%.

Verizon Communications, Inc. (VZ) is showing the Wimbledon tournament on their cellphones for subscribers to Verizon Wireless' V Cast Mobile TV. Verizon has a P/E of 19.8, a PEG of 2.58, and a yield of 3.9%.

Author does not own any of the above.

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