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A Big Upgrade for Callaway Golf

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Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks-- and the track records of the companies behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of the 140,000 members, many of whom are proving to have better investing insight than published analysts do.

More top-performing CAPS members are feeling bullish about Callaway Golf (NYSE: ELY  ) these days -- the stock started the year at a lowly two-star rank in CAPS and has worked its way up to a more formidable four stars recently. A total of 239 members have given their opinion on the golf club maker, with many of them offering analysis and commentary explaining the recent optimism.

The troubled economy is squeezing even discount retailers like Costco (Nasdaq: COST  ) and Target (NYSE: TGT  ) hard, but many CAPS members believe that the premium Callaway brand of golf equipment will outlast the downturn. Many investors view it as a lasting brand like Nike (NYSE: NKE  ) or Under Armour (NYSE: UA  ) -- one that crosses categories well -- rather than a flailing brand such as Crocs (Nasdaq: CROX  ) .

Despite reporting falling revenue during its recent quarter, Callaway was able to gain market share in almost all of its categories and continues to focus on long-term growth. It's made investments for international expansion as it sees opportunities overseas and is seeing strong demand from the uPlay acquisition it made at the end of 2008. The acquisition puts Callaway in the crowded golf handheld GPS device market alongside Garmin (Nasdaq: GRMN  ) , but the uPlay device is claimed to be the only GPS that shows actual aerial imagery.

Callaway's market share gains have several analysts bullish on the stock also, as they see upside potential on margin improvement in its high-margin categories. CAPS members also like the absence of long-term debt on its balance sheet and shares that are selling for far less than book value.

Do you think Callaway deserves its new, higher status? Add your thoughts in the comments box below, or head over to CAPS to rate it yourself. While you're at it, see what the very best CAPS analysts are saying now about the company.

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Fool contributor Dave Mock's golf game could use an upgrade, and a GPS course navigator just might do the trick. He owns shares of Garmin. Under Armour is a Moltey Fool Hidden Gems and Rule Breakers recommendation. Costco is a Stock Advisor and Inside Value pick. Garmin is a Global Gains pick. The Fool owns shares of Costco and Under Armour. The Fool's disclosure policy stuns opponents with a surprisingly quick left jab.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 08, 2009, at 10:24 AM, catoismymotor wrote:

    Ten years ago I went to a used golf club store and bought a driver for $15. It was an all graphite ATX with a 10.5 face. It felt good and balanced to me. It had seen better days but had many good ones left. As a bonus it was solid black, matte finish on the shaft and the head. A had only owned it a few weeks before I took it to a driving range to hit some balls with my dad. As we set up at our tees a middle aged man pulled up in his shiney new Corvette, with some song blarring from the stereo. He go out and pulled a brand new bag of Callaway clubs from his trunk. He walked inside to get a basket of balls and set up a few tees down from where my dad and I were standing. The man stood proudly looking over his shiney bag of clubs. He said something to himself and pulled out his Big Bertha driver. He took a few swings at the rubber tee. He chuckled to him self. He set a ball on the tee, swung back and let it rip! I have never seen a ball shank so bad since. He set up another ball. Shank! And another. Shank! This went on for a few minutes. Mean while I am having fun aiming at the 150 marker with my seven iron. Occasionally I would hear words that rhyme with duck or bell come from his direction. Soon a friend joined him and that starting saying sweet things about the new Callaway clubs. I reached into my bag and pulled out my $15 driver. My this time I started calling it Darth Vader's toilet brush. I took a few practice swings with it. I started off hitting it a bit soft, as I tend to do. The Callaway owner starting hitting with his Big Bertha again. He started to get improve before his buddy started making remarks that he though twould help. Soon he was hitting as bad as ever. At that point I decided to unleash. I hit three in a row that sounded like rifle shots, and should have gone farther, but went straight and farther than anything he had been able to. He took notice of my club and asked me from his tee what I was hitting. When he found out I was showing up him and his $400 club with a second hand $15 modle his face turned almost as red as his Corvette.

    The moral of this story is: Callaway might be a better long term buy than short. Once the sting is gone from the economic crisis the people who are more bluff and guff and flash over substance will start to buy frivolous and overrated items again.

    BTW: For those of you that can afford to drop $3500 and have made golf your real hobby my hat is off to you. Wannabe hacks that think a bag of expensive clubs will cure what ails them are the ones that I laugh at.

  • Report this Comment On September 08, 2009, at 10:27 AM, catoismymotor wrote:

    The typos are free of charge. ;)

  • Report this Comment On September 08, 2009, at 9:38 PM, uniqueusername99 wrote:

    Agreed. If you are a bad golfer you might as well be swinging a rake at the ball - you'll get the same effect.

    However, if you are a good golfer, a decent set of clubs (not $3500 worth) can make that marginal difference in your game to lower your handicap a few points (if you care about that sort of thing).

  • Report this Comment On September 09, 2009, at 6:00 PM, EnigmaDude wrote:

    Nice story cato, however, it is not very relevant. Callaway is the "Cadillac" of golf equipment, just like Garmin is the industry leader in GPS (and not just handheld units - they also make navigation systems for ships at sea, etc. but that is another story).

    I'm not a handicap golfer but I did manage to buy a set of new, previous model year Big Bertha clubs and they improved my game substantially. As in any sport the equipment helps only if the talent is there to begin with.

    Callaway is not the only big name in golf (Ping, Nike are some others that make good stuff) but they definitely have the reputation for being top-tier.

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Related Tickers

2/10/2012 4:00 PM
ELY $6.42 Down -0.05 -0.77%
Callaway Golf Comp… CAPS Rating: ***
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TGT $52.43 Down -0.27 -0.51%
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COST $84.20 Down -0.33 -0.39%
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Garmin CAPS Rating: **

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