Golf as a Social Meeting Point: An Opportunity for Investors

In recent years, golf has increasingly evolved into a social experience, with nearly half of the surveyed golfers indicating that they primarily play with friends. This development highlights the communal aspect of the game, which golf course operators can leverage to refine their marketing strategies and strengthen their customer loyalty. Additionally, the demand for golf lessons is rising: 36 percent of golfers reported taking lessons last year, with this number reaching 67 percent among GolfNow users. This demonstrates a strong interest in improving one's skills, independent of competitive ambitions. Golf company stocks are counted among cyclical consumer goods stocks for several reasons. Golf products and services, such as equipment, apparel, and memberships, are considered discretionary goods. Consumers tend to spend more on these products when economic conditions are favorable. During economic upturns, golf stocks thrive, while they often suffer during downturns. The golf industry frequently mirrors broader consumer trends, as increased participation in recreational activities like golf indicates a robust economy. Companies in the golf sector are closely linked to consumer spending patterns in the leisure and recreation sector, which are essential aspects of the cyclical consumer goods sector. Jeff DeGraaf from Renaissance Macro views the current season as promising for cyclical stocks. He observes a specific market situation with overbought yields and a dollar that is trending downward, which has historically been advantageous for cyclical stocks. The end of October traditionally marks one of the most optimistic weeks for three-month forward returns. Considering these factors, DeGraaf sees potential for cyclical trading activities extending into the first half of 2025. Given the increasing participation in golf as a leisure activity, golf stocks could benefit from a rise in consumer spending. The prospect of a growing industry presents a lucrative investment opportunity, one that promises positive momentum through the general development of cyclical consumer goods.