3 Leisure Stocks That Could Keep Winning Streak Alive in 2024
The Leisure industry is likely to have benefited from robust demand for recreational products and golf business. The inclination toward business modifications, consistent strategic partnerships and digital initiatives has been a tailwind for most companies.
Despite concerns regarding the volatile macro environment, stocks like Royal Caribbean Cruises Ltd. RCL, Live Nation Entertainment, Inc. LYV and Vista Outdoor Inc. VSTO emerged as major winners in 2023. The streak is likely to continue in 2024, buoyed by product innovation, cost-saving efforts and pricing actions.
Leisure industry: A Snapshot
The Leisure industry comprises a wide range of recreation providers such as cruise, entertainment and media owners, theme park makers, resort operators and event organizers. Some industry participants also have ski and sports businesses.
Of late, the golf industry has been gaining from high participation by millennials. Technology has also been playing a vital role in reshaping the sport. In 2023, there was an 8% rise in rounds played, fueled by favorable weather conditions during spring, summer and fall. Off-course participation in golf surged to 27 million in the United States. Experts predict 4% growth in the golf apparel market by 2024. The social aspect of golf attracts Gen Z players, with 81% highlighting it as a motivating factor. Projections indicate that the global golf equipment market will reach $8.74 billion by the end of 2023. However, mini-golf faces limited accessibility, with only 33% being publicly owned or accessible, despite experiencing a decline.
On a per capita basis, each individual in the United States contributed US$7.09 to this revenue in 2023. This underscores the significance of the thriving and profitable Golf Equipment industry, especially in the United States, where there's a notable uptick in demand for top-notch golf gear. Players are increasingly seeking high-quality equipment to elevate their game and maintain competitiveness within the sport.
While the market for new boat sales has stabilized, consumer confidence remains strong. Projections suggest that shipments within the U.S. recreational boat market could reach 510,347 units by 2028. The U.S. recreational boat market is expected to reach a value of US$28.54 billion by 2028, exhibiting an 8.69% CAGR. Various factors, such as the growing presence of middle-class families, increased engagement in outdoor recreational activities and a preference for premium and luxury goods propel the market's upward trajectory. The continuous introduction of innovative products and new features is pivotal in driving significant sales growth.
The cruise industry is gaining traction on the back of its staycation offerings, new hardware, a strong pricing environment and consistent growth from onboard revenue areas. Although companies are bearing the brunt of a challenging macroeconomic environment, bookings for most companies remain strong for the rest of 2023 and the first half of 2024.
The Cruises market is anticipated to hit US$25.14 billion in revenues by 2023. Forecasts indicate an annual growth rate (CAGR 2023-2028) of 7.84%, leading to an estimated market size of US$36.67 billion by 2028. User numbers in this market are projected to reach 33.43 million by 2028, with user penetration expected to rise from 0.32% in 2023 to 0.42% by 2028. The average revenue per user (ARPU) is forecast to reach US$1.03 thousand. By 2028, approximately 25% of the total revenues in the Cruises market is anticipated to be generated through online sales.
The theme park industry has likely thrived due to strong consumer spending and significant investments in new entertainment experiences, shows and digital upgrades for guests. Initiatives like launching diverse-age-targeted shows, enhancing fireworks displays and live performances and exploring fast-entry gates and automated ticketing areas represent smart strategic moves. The changing landscape of social media marketing and technological advancements has driven consumers to seek personalized experiences when planning trips and making reservations.
Companies are also constructing hotels integrated with their parks, aiming to attract guests from other properties, extend guest stays, offer enticing vacation packages and enhance guest services to foster loyalty and generate an appealing ROI. We see further potential for growth as these companies monitor additional business opportunities and adapt to evolving customer preferences.
Per the report, the US Amusement and Theme Park Industry will likely experience a growth rate surpassing 3.5% between 2020 and 2025. This upside stems from the rising integration of technological advancements, particularly augmented and virtual reality. The incorporation of sophisticated motion simulators, hydraulics, pneumatics and an enhanced focus on improving customer experiences are anticipated to drive increased market demand in the forthcoming years.
3 Winning Leisure Picks
Although economic uncertainty prevails, it would be appropriate for investors to focus on those fundamentally sound stocks. Investors can keep an eye on the following Leisure stocks that have performed well and are expected to continue their winning streak in 2024.
We have shortlisted five Leisure stocks with the help of the Zacks Stock Screener that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold) and have gained more than 20% in the past year. Precisely, these stocks have outperformed their respective industries and the broader Leisure sector in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Royal Caribbean operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. The company is poised to benefit from improvements in booking activities, e-commerce enhancements and fleet-expansion efforts. Also, the improved pricing environment and the continued strength in onboard revenue areas bode well. The company's booking volume has maintained a growing pace in third-quarter 2023, with momentum seen in 2023 and notably in 2024 sailings.
Royal Caribbean currently flaunts a Zacks Rank #1. The stock has surged 145.4% in the past year compared with the industry’s 18.3% growth. For 2024, the Zacks Consensus Estimate for RCL’s financial-year sales and earnings per share (EPS) suggests an increase of 13.7% and 38.1%, respectively, from the year-ago period’s levels.
Live Nation operates as a live entertainment company. It operates through Concerts, Ticketing and Sponsorship and Advertising segments. The company is poised to benefit from pent-up demand for live events, robust ticket sales and the sponsorship and advertising business. Also, the emphasis on new client and venue additions bodes well. Given the strength in consumer demand and confirmed sponsorship activity (fully committed) at more than $1 billion in revenues, the momentum is likely to persist in the upcoming periods.
Live Nation currently flaunts a Zacks Rank #1 and has gained 29.2% in the past year. For 2024, the Zacks Consensus Estimate for LYV’s financial year sales and EPS suggests an increase of 8.2% and 61.1%, respectively, from the year-ago period’s levels.
Vista Outdoor is a leading global designer, manufacturer and marketer of outdoor recreation and shooting sports products. The company is benefitting from strong consumer demand and retail orders across its ammunition brands, product innovation and contract wins, including the Department of Homeland Security and the Miami-Dade Police Department. Moving forward, the company is optimistic about the Revelyst list that showcases products, including Foresight Sports, Bushnell Live Camera with True Target and onX integration. Also, it emphasizes expanding its international footprint, doubling down on D2C business and expanding technology in gaming investments (particularly within the Precision Sports and Technology area) to drive growth.
Vista Outdoor currently carries a Zacks Rank #3 and has gained 23.3% in the past year. For the fiscal 2025, the Zacks Consensus Estimate for Vista Outdoor’s financial year sales and EPS suggests growth of 3.8% and 8.9%, respectively, from the year-ago period’s levels.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
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