If you’re like the rest of the world, at some point lately you saw Mark Zuckerberg of Facebook come out and tell us all about the “metaverse.” The company even changed its name to Meta Platforms, Inc. (FB).
Basically, in the metaverse, we’ll all be in virtual reality, socializing and gossiping together and going to electronic classrooms and online workplaces where everything — even our exercise machines — are totally online!
Well, that requires that we are all willing to constantly live in an online world, which to me sounds like a horrifying prospect… and a lot like March of 2020 when you couldn’t get outside much at all.
Now, I’m online for a substantial portion of the day for work purposes, but I do not live my life on the computer. Life is what’s outside the computer! And I think that what we’re going to see is much more like what we saw during the 2020 lockdowns…
Nobody really liked it very much, and I don’t think we really want to live our lives completely online. I also don’t think any of us want our kids and grandkids living their entire lives online.
Furthermore, I think as the metaverse becomes more of a thing, we’re going to see a push to get both kids and adults back outside to play, hunt, fish, swim and everything else in an effort to push back against the metaverse trend as the United States and the rest of the world say no to that way of life.
I do see that it can be useful for online learning and some other things, but I don’t want to live in the metaverse.
Academy Sports and Outdoors, Inc.
The biggest beneficiary of this trend is going to be one very well-run sporting goods company, Academy Sports and Outdoors, Inc. (ASO), which has 259 stores across 16 states, mostly in the southern part of the US.
This is an extremely well-run company, and they’ve really been growing as we’ve seen a move to get back outside. They just reported the best quarter in company history, which makes sense because they sell the entire outdoor experience.
I’m talking about boating equipment, grills, football, basketball and baseball equipment as well as fishing rods, lures and even firearms… and that’s going to make them a major beneficiary of the continuing trend toward personal firearm ownership.
2020 taught a lot of firearm-reluctant people that it makes a whole lot of sense in today’s world to get a firearm, get trained on how to use it and own one for personal protection. That’s not going to go away, and just as sure as day follows night, eventually the Biden administration is going to get around to talking about gun control.
If in the unlikely event they pick up ground in the 2022 elections and the democrats gain more seats, you can look for the gun control discussion to get very loud very quickly. The gun ownership trend could get a lot stronger going forward.
So, there are a lot of drivers for growth in place. Both the trend to get outside, which I think is going to be the anti-metaverse pushback, and the desire to own firearms for personal protection are going to continue to grow, and ASO is going to be a major beneficiary of this.
The stock is currently trading at eight times earnings. However, they’re going to grow earnings for the next five years at better than 40% a year, according to the analysts that follow the stock.
The stock is entirely too cheap, and when compared to other sporting goods companies, it should be trading at least 50% higher than the current stock price.
If they come anywhere close to — and I think they will probably exceed — the earnings expectations of the analysts following the company, this stock could go four or five times higher from current levels.
It’s a high-growth company trading at a ridiculously low multiple of earnings, which sets up all kinds of tailwinds that are going to push this stock a lot higher.
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