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Leisure & Recreation Industry Looks Promising: 3 Stocks to Buy
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The Zacks Leisure and Recreation Services industry has been gaining from optimizing business processes, consistent partnerships and digital initiatives. Robust demand for concerts, easing trade tension and strong bookings for cruise operators are supporting the industry. Firms like Royal Caribbean Cruises Ltd. (RCL - Free Report) , Carnival Corporation & plc (CCL - Free Report) and Planet Fitness, Inc. (PLNT - Free Report) are likely to benefit from the trends mentioned above.
Industry Description
The Zacks Leisure and Recreation Services industry comprises various recreation providers, such as cruise, entertainment and media owners; golf-related leisure and entertainment venue businesses; and theme park makers, resort operators and event organizers. Some industry players have ski and sports businesses, while some operate health and wellness centers onboard cruise ships and at destination resorts. Many companies are engaged in hospitality and related businesses. A few industry participants also provide weight management products and services. These companies primarily thrive on overall economic growth, which fuels consumer demand for products. Demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Leisure & Recreation Services Industry's Future
Robust Demand Helps Cruise Operators: The cruise industry is benefiting from strong demand for cruising and accelerating booking volumes. The industry is benefiting from solid bookings related to North American and European sailings. Also, strong pricing (on closer-in-demand) and solid onboard spending bode well for the industry.
Theme Park Operators & Live Entertainment Benefit From Robust Demand: The theme park industry is benefiting from robust demand. Theme park operators have been gaining from improving visitation. Consumer spending at theme parks continues to rise. The theme park sector is experiencing a boost from integrating technology, particularly through augmented and virtual reality. Live entertainment firms have benefited from pent-up live event demand and robust ticket sales.
Trade Tensions Ease: President Donald Trump hinted at an upcoming visit to China, suggesting a possible reset in U.S.-China relations after recent trade tensions. He made the remarks while hosting Philippine president Ferdinand Marcos Jr., emphasizing strong military ties with Manila. Trump noted improving diplomatic ties with Beijing, saying relations are going well. He pointed out that China has resumed rare-earth magnet exports to the United States in record amounts. These materials are vital products for iPhones and electric vehicles. The move signals renewed cooperation between the two global powers.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Leisure and Recreation Services industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #93, which places it in the top 38% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright, near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the top 50% of the Zacks-ranked industries results from a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in the group’s earnings growth potential.
Before we present a few stocks that investors can consider, let us analyze the industry’s recent stock-market performance and valuation picture.
Industry Outperforms the Sector
The Zacks Leisure and Recreation Services industry has outperformed the Zacks S&P 500 composite and its sector in the past year. Stocks in the industry have collectively gained 29.4% in the past year compared with the broader sector’s rally of 28.4%. The S&P 500 has risen 16.4% in the said time frame.
1-Year Price Performance
Valuation
Based on the forward 12-month P/S, the industry trades at 2.51X compared with the S&P 500’s 5.27X and the sector’s 2.35X. In the past five years, the industry has traded as high as 6.37X and as low as 1.68X, the median being 2.21X, as the charts show.
P/S Ratio (F12M) Compared With S&P
3 Leisure & Recreation Services Stocks to Keep an Eye On
Carnival: The company is benefiting from sustained demand strength, increased booking volumes, higher onboard revenues and cost discipline. With solid performance in every area, the company raised its 2025 guidance, supported by operational efficiency and strategic growth initiatives. Also, the focus on ship additions and fleet optimization, along with investing in new marketing campaigns on the back of global demand trends, bodes well.
Shares of this Zacks Rank #1 (Strong Buy) company have soared 64.3% in the past year. In fiscal 2025, CCL’s sales and earnings are expected to witness year-over-year growth of 5.8% and 40.1%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: CCL
Royal Caribbean: The company is benefiting from strong cruising demand from new and loyal guests and robust booking trends. Also, strength in consumer spending onboard and pre-cruise purchases bodes well. The company emphasized investing in a modern digital travel platform to streamline the vacation booking process for its customers and expand wallet share. RCL expresses optimism regarding the prospects of private destinations and anticipates it as a key driver of growth in the upcoming periods.
Shares of this Zacks Rank #2 (Buy) company have skyrocketed 111.9% in the past year. In fiscal 2025, RCL’s sales and earnings are expected to witness year-over-year growth of 9.6% and 31.4%, respectively.
Price and Consensus: RCL
Planet Fitness: The company is benefiting from the contributions of store openings, higher royalty revenues and an asset-light growth model. The strength in the contributions from these factors, along with member acquisitions, was reflected in the 6.1% year-over-year increase in system-wide same-club sales in the first quarter of 2025. For 2025, the company remains optimistic on the back of its tailwinds to navigate the risky market and ensure profitability.
Shares of this Zacks Rank #2 company have jumped 50.6% in the past year. In 2025, PLNT’s sales and earnings are expected to witness year-over-year growth of 10.4% and 12.4%, respectively.
Price and Consensus: PLNT
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Leisure & Recreation Industry Looks Promising: 3 Stocks to Buy
The Zacks Leisure and Recreation Services industry has been gaining from optimizing business processes, consistent partnerships and digital initiatives. Robust demand for concerts, easing trade tension and strong bookings for cruise operators are supporting the industry. Firms like Royal Caribbean Cruises Ltd. (RCL - Free Report) , Carnival Corporation & plc (CCL - Free Report) and Planet Fitness, Inc. (PLNT - Free Report) are likely to benefit from the trends mentioned above.
Industry Description
The Zacks Leisure and Recreation Services industry comprises various recreation providers, such as cruise, entertainment and media owners; golf-related leisure and entertainment venue businesses; and theme park makers, resort operators and event organizers. Some industry players have ski and sports businesses, while some operate health and wellness centers onboard cruise ships and at destination resorts. Many companies are engaged in hospitality and related businesses. A few industry participants also provide weight management products and services. These companies primarily thrive on overall economic growth, which fuels consumer demand for products. Demand, which is highly dependent on business cycles, is driven by a healthy labor market, rising wages and growing disposable income.
3 Trends Shaping the Leisure & Recreation Services Industry's Future
Robust Demand Helps Cruise Operators: The cruise industry is benefiting from strong demand for cruising and accelerating booking volumes. The industry is benefiting from solid bookings related to North American and European sailings. Also, strong pricing (on closer-in-demand) and solid onboard spending bode well for the industry.
Theme Park Operators & Live Entertainment Benefit From Robust Demand: The theme park industry is benefiting from robust demand. Theme park operators have been gaining from improving visitation. Consumer spending at theme parks continues to rise. The theme park sector is experiencing a boost from integrating technology, particularly through augmented and virtual reality. Live entertainment firms have benefited from pent-up live event demand and robust ticket sales.
Trade Tensions Ease: President Donald Trump hinted at an upcoming visit to China, suggesting a possible reset in U.S.-China relations after recent trade tensions. He made the remarks while hosting Philippine president Ferdinand Marcos Jr., emphasizing strong military ties with Manila. Trump noted improving diplomatic ties with Beijing, saying relations are going well. He pointed out that China has resumed rare-earth magnet exports to the United States in record amounts. These materials are vital products for iPhones and electric vehicles. The move signals renewed cooperation between the two global powers.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Leisure and Recreation Services industry is grouped within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #93, which places it in the top 38% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright, near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the top 50% of the Zacks-ranked industries results from a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in the group’s earnings growth potential.
Before we present a few stocks that investors can consider, let us analyze the industry’s recent stock-market performance and valuation picture.
Industry Outperforms the Sector
The Zacks Leisure and Recreation Services industry has outperformed the Zacks S&P 500 composite and its sector in the past year. Stocks in the industry have collectively gained 29.4% in the past year compared with the broader sector’s rally of 28.4%. The S&P 500 has risen 16.4% in the said time frame.
1-Year Price Performance
Valuation
Based on the forward 12-month P/S, the industry trades at 2.51X compared with the S&P 500’s 5.27X and the sector’s 2.35X. In the past five years, the industry has traded as high as 6.37X and as low as 1.68X, the median being 2.21X, as the charts show.
P/S Ratio (F12M) Compared With S&P
3 Leisure & Recreation Services Stocks to Keep an Eye On
Carnival: The company is benefiting from sustained demand strength, increased booking volumes, higher onboard revenues and cost discipline. With solid performance in every area, the company raised its 2025 guidance, supported by operational efficiency and strategic growth initiatives. Also, the focus on ship additions and fleet optimization, along with investing in new marketing campaigns on the back of global demand trends, bodes well.
Shares of this Zacks Rank #1 (Strong Buy) company have soared 64.3% in the past year. In fiscal 2025, CCL’s sales and earnings are expected to witness year-over-year growth of 5.8% and 40.1%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: CCL
Royal Caribbean: The company is benefiting from strong cruising demand from new and loyal guests and robust booking trends. Also, strength in consumer spending onboard and pre-cruise purchases bodes well. The company emphasized investing in a modern digital travel platform to streamline the vacation booking process for its customers and expand wallet share. RCL expresses optimism regarding the prospects of private destinations and anticipates it as a key driver of growth in the upcoming periods.
Shares of this Zacks Rank #2 (Buy) company have skyrocketed 111.9% in the past year. In fiscal 2025, RCL’s sales and earnings are expected to witness year-over-year growth of 9.6% and 31.4%, respectively.
Price and Consensus: RCL
Planet Fitness: The company is benefiting from the contributions of store openings, higher royalty revenues and an asset-light growth model. The strength in the contributions from these factors, along with member acquisitions, was reflected in the 6.1% year-over-year increase in system-wide same-club sales in the first quarter of 2025. For 2025, the company remains optimistic on the back of its tailwinds to navigate the risky market and ensure profitability.
Shares of this Zacks Rank #2 company have jumped 50.6% in the past year. In 2025, PLNT’s sales and earnings are expected to witness year-over-year growth of 10.4% and 12.4%, respectively.
Price and Consensus: PLNT
