Memorial Day weekend is the kick-start to summer, and that means fun in the sun for millions of Americans. Kids are looking forward to playtime, and adults are, too. As we all know, summer brings out the kids in all of us.
The summertime is great for outdoor activities for young and old alike. From boating to rock climbing, there are a million things to do during the summer. As an investor, you should attempt to be ahead of the trends, and therefore, identify companies that will benefit from seasonal purchases.
With oil prices still low and the dollar still strong, people will have extra money and stronger purchasing power this summer season. This should translate into more leisure activity for Americans and, therefore, more purchases of leisure items this summer.
Zacks has identified four companies that are well positioned in the leisure segment to capture this summertime trend. These leisure and recreational companies are entering the height of seasonality. Whether it’s hiking, boating, the gun range or basketball — these companies have you covered.
So, enjoy the summer playing while your investments are paying. Let’s check out the four best stocks to buy for summertime fun:
4 Best Stocks to Buy for Summer: Black Diamond (BDE)
Black Diamond (BDE) holds a Zacks Rank #1 (Strong Buy) grew from a backyard anvil and hammer in 1957 to a global company with offices in three continents. Black Diamond management prides itself on being passionate climbers and skiers, who make climbing and skiing equipment.
BDE designs, manufacturers and markets outdoor performance equipment and apparel for climbing, mountaineering, backpacking, skiing, cycling and other outdoor recreational activities in the U.S. and internationally.
In the most recent reporting quarter, Black Diamond saw sales improve 13% year-over-year to post a record $50.3 million and saw selling, general & administrative expenses (SG&A) decline 8% to $19.2 million.
BDE also saw improved gross margins, but the biggest news was that management announced that it had received several non-binding indications of interest of the sale of both their Black Diamond and POC brands. The results of the process should be announced in Q3 2015.
The combination of strong summer sales and a potential buyout of two brands has Black Diamond poised for solid price appreciation over the next several months. BDE stock will be reporting Q2 2015 results on Aug. 10.
4 Best Stocks to Buy for Summer: Malibu Boats (MBUU)
Malibu Boats (MBUU) holds a Zacks Rank #1 (Strong Buy) has been designing, manufacturing and marketing performance sport boats since 1982. Malibu Boats’ focus has been on the performance and versatility of its boats.
MBUU has held the number one market share position in the U.S. since 2010. According to management, Malibu Boats has been a “consistent innovator in the powerboat industry, designing products that appeal to an expanding range of recreational boaters and water sports enthusiasts, whose passion for boating and water sports is a key aspect of their lifestyle.”
In the most recent reporting quarter, Malibu Boats saw net sales increase 28.8% year-over-year, unit volume increased 24.4% year-over-year, gross profit rose 33.5% year-over-year, adjusted Ebitda was up 31.9% year-over-year, adjusted fully distributed net income jumped up 73.5% year-over-year and gross margins improved 150 bps year-over-year.
Looking towards the Q4 2015 earnings announcement on Sept. 10, MBUU management has stated that March sales grew high single digits, and the positive momentum has carried into April.
Management alluded to a “substantial” April with a year-over-year increase in flooring activity; indicating strong retail sales for Malibu Boats. Overall, it is expected to be a strong summer for MBUU stock.
4 Best Stocks to Buy for Summer: Smith & Wesson (SWHC)
Smith & Wesson (SWHC) holds a Zacks Rank #1 (Strong Buy) shipped its first revolver products way back in 1852. Since 1852, Smith & Wesson has become a global leader in safety, security, protection and sport.
Smith & Wesson is a leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products and training to the global military, law enforcement and consumer markets. Further, SWHC’s online retail segment sells firearms accessories, branded products, apparel and related shooting supplies.
In the most recent reporting quarter, Smith & Wesson saw a normalization of purchase activity after last year’s consumer surge in firearm purchases, yet “the firearm division exceeded the updated expectations, reflecting solid orders from distributors and key retailers,” according to CEO James Debney.
Additionally, the December 2014 acquisition of BTI (Battenfeld Technologies Inc.) provides “an avenue to expand our presence in firearms accessories,” and has unveiled 38 new products only a month after the acquisition. Smith & Wesson expects that the acquisition of BTI will be accretive to its gross margins, earnings per share and cash generated in fiscal 2016, which begins May 01, 2015.
Given the strong performance during the trade show phase in January and February, it is believed that ordering activity has returned to its normal levels after a slowdown due to a large inventory glut from the huge surge in demand last year.
Because of this positive momentum, management raised earnings-per-share and revenue guidance for Q4 2015. Smith & Wesson reports earnings next on June 18.
4 Best Stocks to Buy for Summer: Escalade (ESCA)
Escalade (ESCA) holds a Zacks Rank #1 (Strong Buy) and sold off its information security and print finishing segments in October 2014 in order to solely focus on the sports goods business.
ESCA has manufactured and distributed products to the sporting goods market for over 80 years.
Escalade manufactures and sells sporting goods to retailers, dealers and wholesalers primarily in North America and Europe. Products include basketball goals, archery, indoor and outdoor game recreation and fitness products.
In the most recent reporting quarter, ESCA stock saw revenues from continuing operations increase 21% year-over-year, net income from continuing operations jumped up 52.1% year-over-year and working capital increased 28% year-over-year. Further, the acquisition of Cue and Case (billiards) and a stake in Stiga (ping pong) showed strong investment gains and has helped improve overall growth for Escalade.
Looking towards Q2 2015, ESCA management remains “focused on growing its Sporting Goods business through organic growth of existing categories, strategic acquisitions, and new category development,” according to CEO Robert Keller. ESCA stock reports Q2 2015 earnings on Aug. 24.
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