The coronavirus pandemic has not only kept the leisure industry on edge but almost all the sectors at large. Nevertheless, the industry is gradually coming out of the woods, courtesy of the reopening of the economy and ramped-up vaccinations. The inclination toward business modifications and digital initiatives along with coronavirus-induced secular consumer trends has been a tailwind for most companies.

Despite concerns regarding the pandemic, stocks like OneWater Marine Inc. (ONEW Quick QuoteONEW - Free Report) , Vista Outdoor Inc. (VSTO Quick QuoteVSTO - Free Report) , Pool Corporation (POOL Quick QuotePOOL - Free Report) and Lazydays Holdings, Inc. emerged as major winners in 2021. The streak is likely to continue in 2022, 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 of the industry participants also have ski and sports businesses.

New boat sales have increased sharply amid the coronavirus pandemic. In fact, boat sales have been going through the roof since April-end last year and some dealers are hard-pressed to supply. Per National Marine Manufacturers Association (NMMA) reports, retail unit sales of new powerboats increased 12% in 2020 from the prior-year levels. The uptrend continued in 2021. Per NMMA, “95% of marine CEOs reported that business conditions were expanding or stable in Q2 2021”. The report also stated that 55% of the marine CEOs anticipate the condition to improve. The boat industry continues to focus on consumer experience, digital marketing, operational excellence and human capital development to drive growth. Although pandemic-induced lockdowns and restricted movement were a roadblock, the ship, boat building and repairing market displayed enough resilience to overcome the same. Boat sales in the United States touched a 13-year high. The momentum continues in 2021. Per ResearchAndMarkets report, the boat repairing market is likely to reach $8.75 billion in 2025 with a CAGR of 6.5%.

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. India and China have popped up as two of the largest emerging golf markets. However, golf equipment sales have slowed in recent months. Per the NPD data, golf equipment sales from July through September 2021 were down on a year-over-year basis but up from 2019 levels. Despite a slowdown in sales in the recent months due to the Delta variant, companies are witnessing strong walk-in traffic and improved event sales. We believe that macroeconomic hurdles like supply chain constraints, freight cost, staffing challenges and inflationary pressure are likely to have influenced the pace of growth in the upcoming period.

The cruise industry is gaining traction on the back of its staycation offerings. Although the Delta variant and its corresponding effect on consumers’ confidence have led to operating challenges, bookings for most of the companies remain strong for the rest of 2021 and the first half of 2022. Given the solid booking trends and company-specific initiatives, we believe that return to profitability and strong cash flows would be a rapid turnaround rather than a slow and steady progression.

The theme park industry is likely to have benefitted from a strong consumer-spending backdrop along with the absence of constraints in park capacity and ride seating (particularly in the United States). Emphasis on offerings such as touchless payment systems for in-park purchases (including tickets), digital queues and self-pay systems for food orders is a prudent move. The industry has adopted a new pricing architecture that facilitates the optimization of pricing among various ticket types as well as reduces the debt of discounted promotions. Although demand trends are encouraging, the operating environment remains challenging with the tight labor market and ongoing supply chain constraints. We believe that there is more upside potential as the companies continue to monitor additional business development opportunities and focus on adapting to customer-preference trends.

4 Winning Leisure Picks

Although economic uncertainty prevails due to rising omicron cases, 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 despite pandemic-related woes and are expected to continue the winning streak in 2022.

We have shortlisted five Leisure stocks with the help of the Zacks Stock Screener that sport a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have gained more than 20% so far this year. Precisely, these stocks have outperformed their respective industries and the broader Leisure sector year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

OneWater Marine is one of the largest and fastest-growing marine retailers in the United States. The company is primarily gaining from strong demand from its existing customer base coupled with an influx of former boaters returning to the boating lifestyle. Moreover, strength can be witnessed across its products featuring the board, ski wake, pontoons, saltwater fish, runabout, and the yacht categories. The company is committed to expanding its parts and service business and exploring additional opportunities to improve penetration rates as well as diversify product offerings available to customers. Also, it is optimistic with respect to T-H Marine and PartsVU acquisitions.

OneWater Marine currently sports a Zacks Rank #1 and has gained 77.8% year to date. For 2022, the Zacks Consensus Estimate for OneWater Marine financial-year sales and earnings per share (EPS) suggests growth of 24.1% and 14.4%, respectively, from the year-ago period’s levels.

Image Source: Zacks Investment Research

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 as well as growth from acquisitions such as Remington, HEVI-Shot and QuietKat. It is witnessing increased interest in personal protection, field-to-table movement and Hunting participation. The company anticipates the demand to continue in the foreseeable future. Vista Outdoor is optimistic about the acquisition of Fiber Energy Products, which is likely to pave a path for growth across new and adjacent categories. The company initiated the testing of the ammo subscription program marking the beginning of its digital journey.

Vista Outdoor currently flaunts a Zacks Rank #1 and has gained 69.8% year to date. For 2022, the Zacks Consensus Estimate for Vista Outdoor’s financial-year sales and EPS suggests growth of 32.3% and 115.3%, respectively, from the year-ago period’s levels.

Pool Corp is a wholesale distributor of swimming pool supplies, equipment and related products. The company is gaining from solid performance of the base business, large market presence and strategic expansions through acquisitions. It is also benefitting from solid demand across heaters, pumps, filters, lighting, automation and pool remodeling. The company remains optimistic on the back of products (such as automation and the connected pool), continuation of the de-urbanization trends along with strengthening of the southern migration.

Pool Corp currently carries a Zacks Rank #2 and has gained 45.4% year to date. For 2022, the Zacks Consensus Estimate for Pool Corp’s financial-year sales and EPS suggests an increase of 9.2% and 8.5%, respectively, from the year-ago period’s levels.

Lazydays Holdings offers a comprehensive portfolio of products and services for RV owners and outdoor enthusiasts. The company is currently focusing on acquiring dealerships in top markets to drive growth. During third-quarter 2021, the company acquired Burlington RV and its dealership (in the Milwaukee, WI, market) and B Young RV and its dealerships (in the Portland, OR, and Vancouver, WA markets). It also initiated new greenfield projects in the Omaha, NE and Fort Pierce, FL, markets. Going forward, the company intends to allocate its capital towards new dealership operations to drive growth.

Lazydays Holdings currently sports a Zacks Rank #2 and has gained 21.1% year to date. For 2022, the Zacks Consensus Estimate for Lazydays Holdings’ financial-year sales and EPS suggests growth of 13.6% and 2.5%, respectively, from the year-ago period’s levels.