Citadel is one of the best-known hedge funds in the world. And with $56 billion in invested capital, it's also one of the biggest. Therefore, one would expect founder Ken Griffin to be well-informed about the economy. And indeed, Griffin just shared some of his thoughts on the subject in an interview with CNBC.
Griffin observes that the U.S. economy is growing, the job market is holding up better than expected, and inflation is coming down. To rephrase his conclusions slightly, Griffin believes the economy looks pretty gosh-darn good.
Many analysts believed the U.S. was headed straight for a recession, including Griffin. But Griffin and company are now warming to the economic outlook. And if they're correct about the economy's health, I believe Academy Sports and Outdoors (ASO +1.24%) is a stock to consider buying here. In fact, it would be near the top of my buy list.
NASDAQ: ASO
Key Data Points
Academy Sports and Outdoors is a smaller sporting goods and outdoor retail chain of 275 locations, as of the end of the third quarter of 2023. However, these stores are quite large, with an average of 70,000 square feet per location. Therefore, the company is able to generate high sales volume -- it has over $6 billion in trailing-12-month revenue. And the retailer is quite profitable, with operating income of almost $700 million during the past year.
ASO Revenue (TTM) data by YCharts
Academy Sports' management hopes to open more than 100 new locations over the next few years, reaching $10 billion in annual revenue. And it hopes to expand its net profit margin to 10%, which would yield $1 billion in annual net income. With a market capitalization of less than $5 billion, Academy Sports stock looks like quite a bargain if it hits these goals.
However, the health of the U.S. economy would impact these goals. In a receding economy, consumers would likely spend less on discretionary sporting goods, hurting Academy Sports' business, at least temporarily. However, if Griffin is right and the economy is already trending in a healthier direction, Academy Sports stock could be a screaming buy right now.
