The Dow Jones hitting its historic 20,000 milestone has taken over the headlines this week, but that’s not the only thing giving me optimism about the new market environment. One is strength in non-blue-chip names such as MarineMax Inc (NYSE:HZO).
I’ve kept my eye on consumer discretionary names with the notion that a combination of higher wages and confidence will see greater spending.
MarineMax reported stellar quarter earlier this week and naturally rallied higher as a result. The thing is, I think it still has plenty of upside potential left.
Why HZO Stock Has Upside
HZO is the largest recreational boat and yacht retailer in the country. It sells new and used vessels, and is focused on premium brand names like Sea Ray, Boston Whaler, Meridian and more. It also provides yacht brokerage and charter services.
The execution at this company is great, and the latest quarterly report easily beat on the top and bottom lines. Earnings of 11 cents a share bested estimates for just 3 cents, and revenue of $226.9 million was better than the expected $185 million.
Looking ahead, management forecast earnings of $1.14 to $1.24 a share for fiscal 2017. The Street’s expectations are for 80% earnings growth in the current quarter and 37% growth for the full year. Over the next five years, consensus is for 30% growth per year. With that kind of growth, the stock currently trades for just 13.8 times future earnings, with a price/earnings-growth (PEG) ratio of just 0.58.
The shares gapped higher on the strong numbers and closed above $20 for the first time in over a month. And I think the move opens up the potential for a rally back to the all-time high near $27 over time. As you can see above, the stock can certainly swing, but I like that the overall trend has been higher for more than a year now.
Another reason I like this stock right now is because over time I think we’ll see an increase in consumer spending on things people don’t necessarily need, but that make them happy. Like businesses, consumers have been loath to spend money since the Great Recession in part due to a lack of overall confidence. If recent sentiment surveys manifest into reality, it means those days of angst are gone.
And if that’s true, I want to make sure my portfolio is well-positioned to capitalize on that potential.
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