While the summer has so far delivered above-average temperatures, people have nonetheless been heading outdoors to enjoy recreational activities after being forced to stay indoors for more than a year. In fact, according to a Study Finds report, nearly three in five Americans have transformed from “indoor people” to “outdoor people” since the pandemic.
As the widespread roll-out of the vaccines continues, several companies in the recreation space have been witnessing increasing demand for their products—such as boats and recreational vehicles (RVs). According to the Centers for Disease Control and Prevention (CDC), 67.7% of the U.S. adult population has received at least one dose of COVID-19 vaccine.
So, we think it is wise now to bet on recreation stocks Pool Corporation (POOL), Brunswick Corporation (BC), and Camping World Holdings, Inc. (CWH). They are expected to grow significantly this month and beyond as more people head outdoors.
Pool Corporation (POOL)
As one of the world's largest wholesale distributors of swimming pool supplies, equipment and related leisure products, POOL’s inventory includes a diverse range of products that include construction materials, replacement parts, pool care products and hot tubs. Its customers include swimming pool remodelers and builders, swimming pool repair and service businesses and other commercial customers. POOL is based in Covington, La.
POOL paid an $0.80 quarterly dividend per share on May 28, which represents a 38% increase over the $0.58 per share previous quarterly dividend amount. These payments represent POOL’s solid financial strength.
The company is expected to release its fiscal second quarter earnings results on July 22. POOL’s net sales increased 56.6% year-over-year to $1.06 billion for the first quarter, ended March 31, 2021, driven primarily by elevated demand for residential pool products. Its operating income increased 262.6% year-over-year to $129.03 million. Its net income increased 219.1% from the same period last year to $98.66 million. And its EPS came in at $2.42, up 222.7% year-over-year.
POOL’s revenue is expected to increase 32.9% year-over-year to $1.33 billion for the quarter ending September 30, 2021. The company’s EPS is expected to be $12.42 in its fiscal year 2021, which represents a 36% year-over-year rise. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 27.1% over the past three months to close yesterday’s trading session at $470.88.
POOL’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Quality and Momentum. We have also graded POOL for Sentiment, Growth, Stability, and Value. Click here to access all the POOL ratings. POOL is ranked #25 of 33 stocks in the A-rated Athletics & Recreation industry.
Brunswick Corporation (BC)
BC designs, manufactures, and markets recreational products worldwide. The Lake Forest, Ill., company operates through three segments: Propulsion, Parts & Accessories, and Boats. Its boats include fiberglass sport boats, cruisers, sport fishing, and heavy-gauge aluminum boats.
Freedom Boat Club, a division of BC, announced the acquisition of Fanautic Club, one of the largest European boat clubs, earlier this month. The acquisition is expected to expand the company’s market reach in Europe.
BC is scheduled to release its second quarter financial results on July 29. The company’s net sales came in at $1.43 billion for its fiscal first quarter, ended April 3, 2021, up 48.4% year-over-year. Its sales from its Boat segment increased 43.9% year-over-year to $419.50 million. And its net income increased 145.4% year-over-year to $169.30 million. BC’s adjusted EPS came in at $2.24, up 133.3% year-over-year.
Analysts expect BC’s EPS and revenue to increase 116.2% and 51.4%, respectively, year-over-year to $2.14 and $1.50 billion for the about-to-be-reported quarter, ended June 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has rallied 12.8% over the past six months to close yesterday’s trading session at $97.81.
BC’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. The stock has an A grade for Quality, and a B grade for Growth and Momentum.
In addition to the POWR Ratings grades we’ve just highlighted, one can see BC’s ratings for Value, Stability, and Sentiment here. BC is ranked #5 in the Athletics & Recreation industry.
Note that BC is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Camping World Holdings, Inc. (CWH)
One of the largest retailers of recreational vehicles (RVs) and related products and services, CWH has been operating for more than five decades. The company operates through two segments: Good Sam Services and Plans, and RV and Outdoor Retail. It provides a portfolio of services, protection plans, products, and resources in the RV industry. CWH is based in Lincolnshire, Ill.
On July 12, CWH launched Nautica branded products for the marine, water and outdoor marketplace. The company’s CEO and Chairman Marcus Lemonis, said “The Nautica branded products allow us to expand our offering and increase product touchpoints with today’s consumer which should lead to a higher frequency of visits and a larger market basket.”
For the first quarter, ended March 31, 2021, CWH’s total revenue increased 51.6% year-over-year to $1.56 billion. The company’s gross profit increased 72% year-over-year to $520.49 million. Its net income for the quarter came in at $147.43 million compared to a $14.13 million loss in the prior-year quarter. Its EPS came in at $1.40 compared to a $0.22 loss per share in the year-ago period.
CWH’s revenue is expected to increase 23.8% year-over-year to $1.86 billion for the quarter ending September 30, 2021. Its EPS is expected to come in at $5.80 in its fiscal year 2021, up 58.5% year-over-year. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has soared 48.1% so far this year to close yesterday’s trading session at $38.59.
It’s no surprise that CWH has an overall B rating, which equates to Buy in our POWR Ratings system. Also, the stock has a B grade for Value, Momentum, and Quality.
Click here to see the additional POWR Ratings for CWH (Stability, Growth, and Sentiment). CWH is ranked #19 in the Athletics & Recreation industry.
POOL shares were unchanged in premarket trading Wednesday. Year-to-date, POOL has gained 26.86%, versus a 17.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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