If you’ve been on or near a lake this summer, you may have seen the products of North America’s many recreational boatbuilders. Not many are publicly traded, but luckily for investors, some of the largest are.
With the U.S. economy in one of the longest bullish runs in history, consumer discretionary spending is quite high. And consumers usually only buy boats when they have extra cash. As a result, boat sales increased 4% last year to 276,000 units, the highest level in 11 years.
Three boatbuilders stand out when looking for good investment opportunities, with strong financials and loyal consumer bases.
Mastercraft Boat Holdings MCFT
As one of the premier watersports towboat manufacturers, Mastercraft has been at the leading edge of the industry since 1968. Mastercraft currently offers 12 models, split into four performance and trim levels, from its entry NXT boats to its competition-level Star Series boats. Mastercraft boasts a projected 24.24% earnings growth this quarter, to help lift its full-year EPS growth expectation to 33.49%.
MCFT has also outperformed its peer group by 5.1% YTD. Mastercraft is trading at a large discount compared to the rest of the consumer discretionary goods industry, with a forward P/E of just 7.18x, against the industry average of 21.59x. Mastercraft currently holds a Zacks Rank #2 (Buy) rating, with Style Scores of an “A” for Value and Growth.
Malibu Boats MBUU
Malibu Boats operates as a designer, manufacturer, and marketer of sport boats, primarily in the United States. The company sells its boats under three brands: Malibu, Axis Wake Research, and Cobalt. Malibu has held the largest share of performance watersports boats since 2010. While Malibu has underperformed the market and its industry so far this year, it’s had an astounding 214.2% price increase over the past three years. Malibu is currently trading at a discount to the rest of its industry, but has not always been. This indicates that the stock may be underpriced at the moment.
MBUU currently sits at a Zacks Ranks #1 (Strong Buy) with all of its earnings estimate revisions heading upward recently. Our Zacks Consensus Estimate calls for a strong year over year earnings growth of 40% in 2019.
BRP Inc. DOOO
BRP Inc. designs, develops, manufactures and distributes recreational vehicles. The company offers watercrafts, sport boats, snowmobiles, pontoons, marine propulsion systems and all-terrain and utility vehicles, as well as engines for karts, motorcycles and recreational aircrafts. Its brands include Ski-Doo, Sea-Doo, Can-Am, Evinrude, Alumacraft, and Manitou.
BRP currently holds a Zacks Rank #3 (Hold) but its earnings are projected to increase by 17.5% next quarter and 13.87% in 2019. In comparison, DOOO’s industry is expected to see its earnings shrink by 2.9% in 2019. BRP has also reported an average 6.71% earnings estimate beat over the past three quarters. Plus, BRP’s largest competitor, Polaris PII, has slowly been losing market share in recent years. BRP has also outperformed its peer-group’s price performance and Polaris YTD. BRP’s strategy of consistent acquisitions has helped propel this growth, which includes the purchase of two brands, Manitou and Telwater, in the past year.
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MASTERCRAFT BOAT HOLDINGS, INC. (MCFT) : Free Stock Analysis Report
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