Callaway Golf shares are just off two year highs. The club and ball maker has had a spectacular turnaround the last two quarters as new products (drivers) and cost cuts have jump started growth at the firm. But the run in the stock may be looking close to a near term peak. Barrons reports:

Callaway Golf (ELY) could head lower as the peak summer season wanes amid continued concern about overall consumer discretionary spending. Discounting of golf-club prices, delayed in part by the one-month recall of Nike’s (NKE) new square-shaped driver, is also expected to tee off in the coming months. In addition, Callaway is still in the midst of turning around Top-Flite Golf, the bankrupt ball and club manufacturer acquired in late 2003. Callaway executives have also made their first and largest insider stock sales in years, indicating that there may be limited upside in the near term. CFO Bradley Holiday expects Callaway to continue to cut costs and finish improving its supply chain over the next year or two before focusing on expansion. So far, Callaway has cut the lead time of manufacturing and getting clubs to consumers from 90-to-120 days, to now 60 days. Callaway’s preannounced Q2 earnings last week were better than expected but did little to move the stock higher. Tim Conder, senior leisure analyst at A.G. Edwards & Sons, says the lackluster reaction is because “2007 will create tough comparisons for 2008, and people are just noticing the significant amount of year-to-date insider selling.”

The Callaway share run up is noteworthy primarily for the fact that golf gear makers have had nearly zero growth for about five years.

This entry was posted on Thursday, July 26th, 2007 at 6:28 pm and is filed under Golf Talk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.