After being cooped up indoors for months due to an unusually long, hard winter in the U.S., consumers are itching to go outside and play — and that trend bodes well for the right recreation stocks.
As consumer cyclicals, recreation stocks are extremely sensitive to economic shifts because they rely on discretionary spending, unlike non-cyclicals such as food and utilities that people must buy regardless of the state of the economy.
The good news for recreation stocks: consumers are splurging again. A Gallup poll released last week revealed consumers spent an average of $98 a day last month — $10 higher than the April average. The May spending results, which exclude auto and home purchases — as well as monthly bills — were driven higher by a Memorial Day weekend spending spree. Daily consumer spending averaged $134 per day for May 27-29, the highest level since 2008.
The Gallup data reveals the brighter side of the odd impact the bad winter had on consumer spending. The Commerce Department reported a slight decline in consumer spending in April, but it turns out that the 0.1% decline was due to lower heating bills.
So why does this matter to investors? U.S. consumers are opening up their wallets and flashing the plastic again — and after a brutal winter cooped up indoors, they’re more than ready for fun in the sun.
Playing into those trends, here are 3 recreation stocks poised to deliver hot returns this summer: