Spring is the time when the cold wave and general negativity begin to fade, thus raising overall optimism.
The season has investment opportunities blossoming too as share prices are usually suppressed, giving a chance to scoop up many big companies at attractive discounts. Recovery starts with earnings, and share prices usually follow. This is especially true for companies that cater to warm weather activities like travel and leisure.
So, What’s Special About This Spring?
The current economic backdrop is quite favorable. Steady rise in wages, record low jobless rate and upbeat consumer confidence are expected to give leisure stocks an extra push. Trump’s business-friendly policies including tax cuts and repealing regulations are additional tailwinds.
Consumer sentiment touched a 14-year high this month as households were more optimistic about the economy. An uptick in consumer sentiment generally leads to a rise in outlays, eventually benefiting companies related to travel and leisure activities.
In February, Consumer Confidence Index reached its highest level since 2000, after a modest increase in January. The index rose 6.5 points to 130.8. Consumer spending is expected to rise through 2018 backed by a favorable economic scenario, thus raising optimism for the companies in the leisure and recreation space.
Gross Domestic Product (GDP) grew at a seasonally adjusted annual rate of 2.6% in the fourth quarter of 2017, following gains in the previous two quarters of more than 3%, per the “advance” estimate released by the Bureau of Economic Analysis. This marked the economy’s strongest stretch of growth since the expansion started in mid-2009. Improving economic indicators therefore bode well for the industry as these lead to an increase in leisure and business travel demand.
Thus, we see no reason why the industry should not continue to enjoy gains in the near term, especially when unemployment rate is at a 17-year low and wages continue to grow at a steady pace.
Industry Numbers Promising
According to Cruise Lines International Association (CLIA), demand for cruising has increased 20.5% from 2011 to 2016. The cruise industry is expected to continue growing significantly in 2018 with 27.2 million passengers likely to cruise. This figure is 5.4% higher than projected for 2017.
Coming to the global luxury travel market, ITB World Travel Trends Report 2017/2018 forecasts strong worldwide travel trends. The consultancy anticipates worldwide outbound trips to increase 5% with strongest growth Latin America and Asia. Holiday trips, city trips and Sun and beach holidays are expected to grow 6%, 16% and 9%, respectively.
According to a report from Statista, revenues from the sports and outdoor space are expected to rise at a compound annual growth rate (CAGR) of 9.9% from 2018 to 2022. User penetration, which is currently at 8.7%, is anticipated to touch 10.4% in 2022.
5 Leisure Stocks to Enhance Your Portfolio
With the help of the Zacks Stock Screener, we have zeroed in on five promising stocks from the leisure industry that can lift your spring spirit. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have solid expected earnings growth rate for the current quarter and year.
Leisure Stocks That Can Lift Your Spirits This Spring: MCBC Holdings Inc (MCFT)
MCBC Holdings Inc (NASDAQ:MCFT) is a recreational sport boats provider. It sports a Zacks Rank #1.
The Zacks Consensus Estimate for the fiscal third quarter and 2018 moved up a respective 9.3% and 13.7% in the last 60 days. The company’s current-quarter and year expected earnings growth rate are 67.9% and 40.8%, respectively.
MCBC Holdings, Inc. Net Income (TTM)
Leisure Stocks That Can Lift Your Spirits This Spring: Acushnet Holdings Corp (GOLF)
Golf products provider, Acushnet Holdings Corp (NYSE:GOLF), also flaunts a Zacks Rank of 1. The company’s expected earnings growth rates for the first quarter and 2018 are 13.7% and 26%, respectively. The consensus estimate for the current-quarter and year earnings climbed a respective 9.4% and 16.5% in the last 60 days.
Acushnet Holdings Corp. Net Income (TTM)
Leisure Stocks That Can Lift Your Spirits This Spring: Marcus Corp (MCS)
Movie theaters, and hotels and resorts operator, Marcus Corp (NYSE:MCS), carries a Zacks Rank #2. The consensus estimate for its current-quarter and year earnings moved up 17.6% and 12.5%, respectively, in the last 60 days. The company’s expected earnings growth rates for the first quarter and 2018 are 21.2% and 16.9%, respectively.
The Marcus Corporation Net Income (TTM)
Leisure Stocks That Can Lift Your Spirits This Spring: Speedway Motorsports, Inc. (TRK)
Speedway Motorsports, Inc. (NYSE:TRK) is a leading marketer and promoter of motorsports entertainment, which flaunts a Zacks Rank of 2. The company’s expected earnings growth rates for the first quarter and 2018 are 50% and 35.2%, respectively. In the last 60 days, the consensus estimate for its current-quarter and year earnings moved north a respective 100% and 19.4%.
Speedway Motorsports, Inc. Net Income (TTM)
Leisure Stocks That Can Lift Your Spirits This Spring: Pool Corporation (POOL)
Swimming pool product supplier, Pool Corporation (NASDAQ:POOL) carries a Zacks Rank #2. The company’s bottom line is anticipated to increase 75% and 37.3% in the first quarter and 2018, respectively. The consensus estimate for its current-quarter and year earnings increased a respective 12.9% and 15.9% in the last 60 days.
Pool Corporation Net Income (TTM)
Zacks Editor-in-Chief Goes “All In” on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.