Should I Buy TopGolf Callaway (MODG)? Finance YouTuber Analysis

The YouTuber believes Topgolf Callaway is underestimated by investors due to strong tailwinds, particularly from the Topgolf brand. He highlights the high cash-on-cash returns (50-60%) and a two-and-a-half-year payback period for new venues, indicating excellent unit economics. Furthermore, there's significant growth potential with plans to expand from 92 units to 250 in the US and 250 globally, making it a long-term growth story.

“This is not just a golf company this is a company that's expanding golf to a lot of people that it was not accessible to before that's what makes this such that's what makes this such a great business and one that I'm looking to add more to in the future”

The analyst is bullish on TopGolf Callaway due to the high growth potential of its Topgolf entertainment venues, which offer strong cash-on-cash returns for new facilities. He sees significant optionality in expanding the technology beyond golf into other sports and leveraging virtual/augmented reality, which could drive substantial growth over the next decade.

“I like the optionality that Topgolf Callaway has this isn't a company that just has to be about golf you could be using the facilities that they have with Topgolf for any kind of sports and we can see the company moving into virtual reality even more than it already has augmented reality there's just a ton of options for the technology the company has built”

Travis Hoium recommends Topgolf Callaway, noting its significant revenue growth driven by the Topgolf brand acquisition. He highlights the strong cash-on-cash returns of Topgolf locations (around 50%) and believes the experiential business will continue to grow, especially with more people working from home. The stock's price-to-sales multiple is under one, and the P/E ratio of 26 is considered fair given its growth rate and returns.

“I think this is a fair price to pay for the stock and that's why it's actually been one of my most recent purchases is TopGolf Callaway.”

The analyst is bullish on TopGolf Callaway, citing the strong trend towards experiential entertainment. The economics of Topgolf locations are highlighted, with 50% cash-on-cash returns in the first year. The company has potential for expansion into other sports and augmented reality, leveraging its existing technology. Despite some pandemic-related choppiness, the business is generating $200 million in net income and trading at about 20 times earnings, with strong tailwinds for the segment.

“they're generating 50 return on that investment in the first year that those properties are open that's just incredible from an economic perspective”