By Amey Stone With Father's Day coming up June 19, that perplexing question is surfacing again: What to get dad? After all, how many ties, sweaters, CDs, and books can a fella use? Even if Pops has a hobby, it's often a very expensive one. Sailing, golf, and photography are a few likely suspects -- but the gift-giving possibilities with that stuff can be pricey.
Here's a way around that hurdle: For $20 to $200, why not a gift that (hopefully) keeps on giving -- some company shares. BusinessWeek Online asked eight investment pros their favorite stocks with a Father's Day theme. Here are their picks:
Brunswick (BC). You may not be able to buy dad a yacht for Father's Day, but you can buy him a share of the leading maker of pleasure boats, suggests Peter Cohan, an author and investment strategist in Marlborough, Mass. He notes that in the first quarter Brunswick increased revenues at a 17% rate year-over-year and earnings at a 26% rate, yet it trades at $44 a share, with a price-earnings ratio of just 14. All in all, an attractive buy, he says.
Dad gets seasick? As any bowling or billiards enthusiast knows, Brunswick has long been a top brand name for products for those two sports. However, "what really drives the company is boats and boat engines," says Richard Moroney, editor of Dow Theory Forecasts, who also mentioned Brunswick as a fine Father's Day choice.
Home Depot (HD). The home-improvement giant was Moroney's first thought for Father's Day. Home Depot is facing fierce competition from the faster growing Lowe's (LOW), which lately has seemed to have an edge. But the rivalry has made Home Depot's stock a better buy at $39.50 a share, Moroney figures.
"Home Depot has the potential to surprise people if it gets its mojo back and gets on a growth path," Moroney says. And if your dad prefers to spend his weekends in the aisles of Lowe's, that's not a bad stock pick either, at around $58.80. Most analysts think both companies have good long-term prospects.
Fortune Brands (FO). If your dad spends his weekends on the golf course, a good stock gift is Fortune Brands, says Jim Huguet, president of Great Companies, a Clearwater (Fla.) money-management firm. Fortune Brands is a diversified consumer-products company that owns such blue-chip golf brands as Titleist, Cobra, FootJoy, and Pinnacle. It also happens to own many brands in the "spirits" category, if that's your dad's thing. Jim Beam bourbon, Canyon Road Winery, El Tesoro Tequila, and Vox Vodka are all owned by Fortune Brands.
"They've got some really solid brands and a lot of things this father might enjoy," says Huguet. The stock trades at around $86, yet Huguet believes it's worth $105 a share.
Dad may love his Big Bertha golf clubs, but clubmaker Callaway Golf (ELY) has been in the rough of late. Gary McDaniel, equity research analyst with Standard & Poor's, rates the stock a sell, mainly because he thinks Callaway hasn't invested enough in research and development, and hasn't produced a "breakthrough" driver in recent years, which has hurt profits. While Fortune Brands is up 17% in the past year, Callaway is down 24%.
International Speedway (ISCA). A far better choice for dad -- particularly if he's a NASCAR fan -- is International Speedway, says McDaniel. It earns his top rating (5 STARS), for its strong revenue growth -- driven lately by increases in TV revenues. Turnout at the races is also rising nicely as the sport's popularity continues to expand beyond the Southeast. The stock trades at $56, and it has a p-e of 18, which McDaniel says makes it attractive given its long-term performance and continued strong earnings trends.
This pick also has another Father's Day angle, notes McDaniel: NASCAR was founded by Bill France Sr., in 1947, and his children run International Speedway today.
Harley-Davidson (HDI). Even more macho than stock-car racing is motorcycling. And Harley's stock has long been a favorite of growth-stock pickers, even if they wouldn't know a Hog from a heifer. "The stock has had a tough year because sales slowed down, and it had an earnings hiccup," says Barry Hyman, equity market strategist at Ehrenkrantz King Nussbaum, "but it's still a great growth company."
Think about it: You get the fun of giving your biker dad a piece of Harley-Davidson, without actually purchasing him a $20,000 bike. Shares fell from the low $60s to $45 after a disappointing earnings report in April, but they've since climbed back a little back, closing at $49.28 on June 9.
Jos. A. Bank Clothiers (JOSB). Another Dad's Day choice of Hyman's is this men's clothing retailer. "It's a great idea if you're looking for an alternative to getting him a tie or a sweater," he says.
David Nolan, a portfolio manager with BB&T Asset Management in Richmond, Va., also thought of Jos. A. Bank first when asked for a Father's Day stock. It's a top mover in the men's clothing field and is opening new stores at a fast clip, he says. "There's the risk of [not] being able to handle that expansion," says Nolan, "but they've shown thus far that they've been able to do it." The stock is priced at $41, and margins are improving. Nolan thinks it could climb to $50.
SanDisk (SNDK). This is a great stock gift for techie dads, especially those enamored of digital cameras or music players, says Shigeki Makino, chief investment officer at Putnam Investments. SanDisk makes the flash memory that goes into digital cameras, camera phones, and MP3 players. Many investors mistakenly think it's a commodity chip company, but it's really a play on growth in the market for devices and applications that require flash memory, says Makino.
Plus, the flash technology SanDisk specializes in is improving, so the company should also earn a higher percentage royalties on the next-generation of chips, he says. The stock sells for $26 a share and has a p-e of 17.
Green Mountain Coffee Roasters (GMCR). Here's a choice for the more low-tech dad: a growth stock in the simple business of selling coffee. For its fiscal second quarter reported on May 12, profits jumped 49% year-over-year, driven by strong sales of single-serve pouches favored for office use.
At $33.50, Green Mountain Coffee Roasters is the pick of Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "I think every father should kick back on Father's Day and relax with a fresh cup of coffee," he says.
That may not be enough to drive the stock up, but for all those dads anticipating breakfast in bed on Father's Day, it sounds like a fine idea. Stone is a senior writer with BusinessWeek Online