Leisure stocks are often considered by investors during times of economic strength. In the stock market today, we see plenty of money flow in and out of novelty industries. Leisure stocks, however, offer investors an option to benefit from the “finer things” in life.
While travel stocks may cross over into leisure, this equity class focuses on companies that offer experiences that don’t involve work, per se. Company retreats and workshops are a bit different but the main focus is on relaxation. Leisure stocks don’t have to only involve warm-weather activities either. Ski resorts, lodging, and even “excursions and experiences” can all be byproducts of successful leisure operations.
Why Leisure Stocks?
When it comes to these types of stocks, growth in revenue and cost controls are important. Certain REITs, travel, and entertainment stocks may also find themselves lumped into Leisure. But if you’re focusing on these kinds of stocks specifically for the above reason, value is important. It needs to be derived from fundamentals. It’s great to see a company building a new resort. But if it can’t turn a profit or worse, goes into unserviceable debt, where’s the value in that investment as a leisure stock?
According to a report by Statista, revenues at the sports and outdoor space are expected to witness a CAGR of 9%. This is from 2018 to 2023. User penetration stood at 12.2% in 2018 and is expected to reach 16.7% by 2023. Furthermore, a report by Global Market Insights suggests that the boating market share in the United States will surpass $28.5 billion by 2024.
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Could these leisure industry giants be your next big investment?