The athletics and recreation market has been growing with increasing tourism and active participation of people in outdoor sports activities. Moreover, the rising demand for fitness products due to increasing awareness about health and fitness among people has been favoring the industry.
Apart from the substantial pent-up demand, the ease of travel restrictions and COVID-19 vaccine boosters have led people to venture with rising temperatures to enjoy recreational activities and sporting events. This has led to an increase in demand for companies within this space.
The global leisure boat market is expected to reach $64.08 billion by 2030, growing at a 4.7% CAGR. The increasing popularity of marine and coastal tourism, coupled with the rising demand for recreational watercraft, is driving the market’s growth.
Thus, it could be wise to invest in fundamentally sound recreation stocks Vista Outdoor Inc. (VSTO), MarineMax, Inc. (HZO), MasterCraft Boat Holdings, Inc. (MCFT), BRP Inc. (DOOO), and Columbia Sportswear Company (COLM). These stocks are rated Buy in our proprietary POWR Ratings system.
Vista Outdoor Inc. (VSTO)
VSTO designs, manufactures, and markets outdoor recreation and shooting sports products. It sells under various brands: Remington Ammunition, Bushnell, CamelBak, Bushnell Golf, Foresight Sports, Bell Helmets, Camp Chef, Giro, QuietKat, Stone Glacier, and more. The company operates through two segments: Sporting Products and Outdoor Products.
On June 7, 2022, VSTO’s brand Remington Ammunition partnered with TrueTimber to produce lifestyle apparel for hunters, shooters, and brand enthusiasts. This partnership is expected to boost the company’s customer demand and expand its market reach.
VSTO’s net sales increased 36% year-over-year to $808.60 million in the fiscal 2022 fourth quarter (ended March 31, 2022). Its gross profit increased 58% year-over-year to $287.41 million, while its adjusted net income grew 94% from its year-ago value to $119.08 million. The company’s adjusted EPS increased 100% from the year-ago value to $2.04 for the same period.
The consensus EPS estimate of $1.90 for the fiscal first quarter (ending June 2022) represents a 9.4% improvement year-over-year. The consensus revenue estimate of $779.92 million for the ongoing quarter indicates a 17.7% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past three months, the stock has declined 15% to close the last trading session at $30.43
VSTO’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Value and a B grade for Quality. Among the 39 stocks in the Athletics & Recreation industry, VSTO is ranked first.
Click here to see the POWR Ratings of VSTO for Growth, Momentum, Stability, and Sentiment.
MarineMax, Inc. (HZO)
HZO is a recreational boat and yacht retailer. It sells new and used recreational boats, yachts, marine parts, and accessories and offers yacht brokerage and charter services. HZO operates through two segments: Retail Operations and Product Manufacturing.
On April 4, 2022, HZO acquired Superyacht Management, S.A.R.L., based in the south of France. With this acquisition, the company expands its business globally and is expected to earn higher margins.
In the fiscal second quarter (ended March 31, 2022), HZO’s revenue increased 17% year-over-year to $610.11 million. Its gross profit increased 30.9% from the year-ago value to $205.32 million, while net income grew 37% year-over-year to $53.51 million. The company’s net income per common share came in at $2.37, representing a 40% year-over-year improvement.
For the fiscal 2022 third quarter (ending June 2022), HZO’s revenue is expected to increase 14.6% from the prior-year period to $763.49 million. The Street expects its EPS to increase 16.8% year-over-year to $3.03 in the same quarter. HZO has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 6.2% over the past five days to close the last trading session at $38.72.
HZO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Value and Quality and a B for Growth. The stock is ranked #2 in the same industry.
Click here to see the other ratings of HZO for Momentum, Stability, and Sentiment.
MasterCraft Boat Holdings, Inc. (MCFT)
MCFT is a designer, manufacturer, and marketer of recreational power boats through its four brands: MasterCraft, Crest, NauticStar, and Aviara. It operates through three segments: MasterCraft, NauticStar, and The Crest.
On June 22, 2022, MCFT introduced XT22 T to the XT lineup featuring a traditional bow to deliver more adaptability, performance, and reliability. The new launch is expected to generate high demand and thereby boost revenues.
MCFT’s net sales increased 26.3% year-over-year to $186.74 million in the third quarter ended April 3, 2022. Its adjusted EBITDA grew 16.4% year-over-year to $32.05 million, while its adjusted net income rose 17.4% from the prior-year quarter to $22.41 million. MCFT’s adjusted net income per share came in at $1.21, representing 19.8% year-over-year.
The consensus EPS estimate of $1.49 for the fiscal fourth quarter (ending June 2022) represents a 52.5% improvement year-over-year. The consensus revenue estimate of $194.52 million for the current quarter indicates a 25.1% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has declined 4.1% to close the last trading session at $22.30.
MCFT’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy. The company has an A grade for Value and a B grade for Growth. Again, in the same industry, it is ranked #3.
To see additional POWR Ratings for Momentum, Stability, Sentiment, and Quality for MCFT, click here.
BRP Inc. (DOOO)
DOOO manufactures and markets powersports vehicles and marine products. It offers all-terrain, side-by-side, and three-wheeled vehicles; snowmobiles and personal watercraft; and jet boats, outboards, karts, motorcycles, and recreational aircraft engines. The company operates through two segments: Powersports and Marine.
On June 15, DOOO increased its revolving credit facility by CA$400 million to reach CA$1.5 billion. With the increased credit facility, the company is expected to make further investments for long-term growth and create value for its shareholders.
During the fiscal 2023 first quarter (ended April 30, 2022), DOOO’s revenue increased marginally from the year-ago value to $1.81 billion. The company’s revenue from Year-Round products increased 1.3% year-over-year to $934.40 million.
Analysts expect DOOO’s EPS and revenue to increase 85% and 53.4% year-over-year to $2.13 and $1.90 billion in the fiscal third quarter (ending October 2022). It surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Over the past five days, the stock has gained 4.3% to close the last trading session at $65.68.
DOOO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy. DOOO also has a B grade for Value and Sentiment. The stock is ranked #4 in the same industry.
Click here to see the other ratings of DOOO for Growth, Momentum, Stability, and Quality.
Columbia Sportswear Company (COLM)
COLM offers active lifestyle apparel, footwear, accessories, and equipment products under four brands: Columbia, SOREL, Mountain Hardwear, and prAna. The company operates through four geographical segments: the United States, Latin America, Asia Pacific, Europe, the Middle East, Africa, and Canada.
On April 28, 2022, COLM announced expanding and investing in its facility at Robards, Kentucky, distribution center. Tim Boyle, President, CEO, and Chairman of the Board said, “We think investing in this area will be good for our business, strengthening our supply chain and allowing us to hire top-notch talent.”
On April 22, 2022, the company’s Board of Directors approved a $500 million increase to the company's share repurchase authorization. This might boost shareholder returns significantly.
COLM’s net sales increased 22% year-over-year to $761.51 million in the fiscal first quarter (ended March 31, 2022). The company’s operating income increased 19% from the year-ago value to $83.67 million. Its net income grew 20% from the year-ago value to $66.84 million, while its EPS increased 23% from the year-ago value to $1.03.
Analysts expect COLM’s EPS and revenue to increase 28% and 23.2% year-over-year to $1.95 and $991.23 million, respectively, in the fiscal 2022 third quarter (ending September 2022). The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of COLM declined 2% over the past month to close the last trading session at $75.68.
COLM’s overall B rating translates to Buy in our proprietary rating system. It has a B grade for Sentiment and Quality. Also, it is ranked #5 in the Athletics & Recreation industry.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the COLM ratings for Growth, Value, Momentum, and Stability here.
VSTO shares were trading at $29.72 per share on Tuesday afternoon, down $0.71 (-2.33%). Year-to-date, VSTO has declined -35.49%, versus a -18.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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