Why Big 5 Sporting Goods Is Plunging 14% Today

What happened

Shares of Big 5 Sporting Goods (NASDAQ:BGFV) were tumbling nearly 14% in morning trading Tuesday on no specific company news beyond a broader market rout that may have investors taking profits after a big run-up in the stock.

So what

Big 5 reported blowout earnings a week ago that helped lift shares from under $20 a stub to more than $30 a share — a better than 60% gain — in less than a week. As tech stocks plunge, causing the market indexes to wobble, profit-taking may be the name of the game.

Sports equipment and balls

Image source: Getty Images.

Now what

Absent company-specific news, investors shouldn’t be particularly concerned by a pullback in shares. Big 5 Sporting Goods has benefited from the surge in interest in outdoor recreation that gripped consumers in the wake of the COVID-19 pandemic — a heightened appreciation for the great outdoors that doesn’t look like it’s diminishing anytime soon.

It hasn’t hurt, either, that industry giant Dick’s Sporting Goods largely abandoned the hunting market. While Big 5 sells a limited selection of firearms, it does cater to the hunting market with an assortment of equipment and accessories.

These days, though, it’s likely to be just as much hiking and camping gear that brings in consumers, as well as fitness, sports, athletic apparel, and other leisure time activities. With a broad product lineup touching on all those key categories, Big 5 Sporting Goods should continue to grow.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/05/11/why-big-5-sporting-goods-is-plunging-14-today/

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