3 Leisure & Recreation Products Stocks to Escape Industry Woes

Core Insights - The Zacks Leisure and Recreation Products industry is facing challenges due to high inflation and global economic concerns, but there is a positive trend in fitness product sales and strong boat sales driven by health awareness [1][3] Industry Overview - The industry includes companies providing amusement and recreational products, swimming pools, marine products, golf courses, and related services, thriving on economic growth that boosts consumer demand [2] - Demand is highly dependent on business cycles, driven by a healthy labor market, rising wages, and growing disposable income [2] Current Trends - Concerns about a slowing global economy and high inflation are prevalent, with the consumer price index (CPI) showing a month-on-month increase of 0.3% and a year-on-year increase of 3.1% in January, surpassing economists' predictions [3] - New boat sales are expected to decline in 2023 due to higher interest rates, with the recreational boating sector maintaining sales volumes consistent with 2023 in 2024 [4] - The golf industry is thriving, particularly among younger participants, with emerging markets like India and China contributing to growth [4] Industry Performance - The Zacks Leisure and Recreation Products industry has a Zacks Industry Rank of 198, placing it in the bottom 21% of over 251 Zacks industries, indicating dull near-term prospects [5] - The industry has underperformed the S&P 500, with a collective drop of 1.3% over the past year compared to the S&P 500's 26.5% increase [7] Valuation Metrics - The industry trades at a forward price-to-earnings ratio of 23.94X, higher than the S&P 500's 20.8X and the sector's 17.99X, with historical trading ranges between 12.99X and 44.80X [8] Notable Companies - Acushnet Holdings: Expected to benefit from increased demand for golf products, with sales and earnings growth projected at 2.5% and 5% year-over-year for 2024, respectively [10] - Academy Sports and Outdoors: Benefits from strong consumer demand across various markets, with a 26.1% increase in shares over the past year and a long-term earnings growth rate of 10.1% [12][13] - American Outdoor Brands: Anticipates sales and earnings growth of 5% and 62.2% year-over-year for fiscal 2025, despite a 17.7% decline in stock over the past year [14]