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Leisure Stocks to Flourish in December: 5 Top Picks

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In the last month of the year, providers of leisure products and services are set for gains. The space includes providers of golf service, boats, outdoor spaces, cruises, travel and hotels. A low unemployment rate and steady rise in wages have increased household spending across the United States, boding well for the leisure space.

Spending Spree Drives Economy

U.S. consumers have been driving the economy lately, per the Commerce Department’s report released on Nov 27. Notably, GDP increased at a 2.1% annualized rate in its second estimate of the third quarter. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.9% rate in the third quarter.

In fact, spending increased at a seasonally adjusted rate of 0.3% in October — the fastest in three months and the best since July’s 0.5% rise.

Further, reports from Adobe Analytics show that Black Friday online sales in the United States totaled $7.5 billion, up 20.5% year over year. Black Friday sales are a preview to customer spending trends for the near term.

At the same time, consumer confidence levels remain high, thanks to almost a 50-year low unemployment level, scarce layoffs and steady rise in wages. All these will certainly improve consumer outlays as well.

In fact, in a survey conducted by the University of Michigan, consumer sentiment index rose to 96.8 in November, marking its third monthly gain. This index shows that consumers anticipate inflation, unemployment and interest rates to remain favorable in the near term.

Such healthy consumer spending will certainly offset the hurdles the leisure industry has been facing this year. The leisure industry saw a drop in corporate activities due to trade uncertainties and Trump’s visa restrictions that made traveling to America difficult.

5 Top Picks

The leisure industry, which falls under the Zacks Consumer Discretionary sector, is likely to gain from higher consumer spending owing to a drop in unemployment rate. Therefore, it is wise to say that the space will perform well in December as Americans gear up for the holiday season. Here, we have picked stocks from the space which flaunt a Zacks Rank #1(Strong Buy) or 2 (Buy) and have seen growth on a year-to-date basis.

YETI Holdings, Inc. (YETI - Free Report) designs, markets, retails, and distributes products for the outdoor and recreation market. The company’s expected earnings growth rate for the current year is 25.3% compared with the Leisure and Recreation Products industry’s projected earnings growth of 4.9%.

The Zacks Consensus Estimate for the company’s current-year earnings has risen 3.7% over the past 60 days. Shares of this Zacks Rank #1 company have gained 96.7% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

Studio City International Holdings Limited (MSC - Free Report) operates a gaming, retail, and entertainment resort in Cotai, Macau. The company’s expected earnings growth rate for the current quarter is more than 100% against the Leisure and Recreation Services industry’s expected earnings decline of 30.2%. The Zacks Consensus Estimate for the company’s current-year earnings has risen more than 100% over the past 60 days. This Zacks Rank #2 stock has rallied 16.7% year to date.

Malibu Boats, Inc. (MBUU - Free Report) designs, manufactures, distributes, markets, and sells recreational powerboats, including  performance sport boats, and sterndrive and outboard boats. The company’s expected earnings growth rate for the current year is 5.1% compared with the Leisure and Recreation Products industry’s estimated earnings growth of 3.7%. The Zacks Consensus Estimate for the company’s current-year earnings has moved up 2.1% over the past 60 days. Shares of this Zacks Rank #2 company have risen 11.6% year to date.

Brunswick Corporation (BC - Free Report) designs, manufactures, and markets recreation products that include sport cruisers, sport fishing and boats. The company’s expected earnings growth rate for the next year is 22.3% compared with the Leisure and Recreation Products industry’s expected earnings growth of 15.3%. The Zacks Consensus Estimate for the company’s current-year earnings has moved 0.7% north over the past 60 days. Shares of this Zacks Rank #2 company have grown 24.3% year to date.

Callaway Golf Company (ELY - Free Report) designs, manufactures, and sells golf clubs, golf balls, golf bags, and other golf-related accessories. The company’s expected earnings growth rate for the current quarter is 28.1%. The Zacks Consensus Estimate for the company’s current-year earnings has risen 4.7% over the past 60 days. Shares of this Zacks Rank #2 company have gained 34.2% year to date.

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