With the weather warming and summer approaching, many of us will be headed outdoors, to enjoy the sun, beach and water sports within the next few months.
Low fuel prices may create a big drive toward boating this year. In fact, the recreational boating industry had its best March in eight years, with sales billowing up 19.9 percent industry wide. As we increase our demand on the products made for summer fun, here are a few ways to invest in America’s love for water, sun and beach this summer.
Investing in boating. Financial Planner Steve Lupkas of Dockside Wealth Advisors in Shelton, Connecticut, created a basket of stocks based on his love for boating that has earned 14 percent since October against the 5 percent posted by the Standard & Poor’s 500 index.
[Read: How to Retire Without a 401(k).]
His picks include the electronics companies Garmin (ticker: GRMN) and Flir Systems (FLIR), a large marina and boat dealership operator MarineMax (HZO), the retail store for boaters and personal watercraft enthusiasts West Marine (WMAR), sporting goods company Johnson Outdoors (JOUT) and bilge pump maker Xylem (XYL).
West Marine, Garmin and MarineMax are at the top of his favorites list.
“I’m looking at them as a basket, so that if West Marine is not having a great day, maybe MarineMax or sporting goods company Johnson Outdoors or one of the other ones will balance it off,” he says.
Keep in mind, he warns, that these are aggressive picks. They’re not like the relatively stable sunscreen maker Johnson & Johnson, (JNJ), he says. These are fair-weather stocks that will likely dip if the summer is especially rainy on the eastern seaboard.
“They’re going to be more volatile,” Lupkas says.
[See: 7 Ways to Tell if a Stock Is a Good Price.]
Yet, there’s another reason to choose West Marine, says Andy Swan, founder of the research firm LikeFolio based in Louisville, Kentucky.
“We’re seeing purchase intent volume at levels we haven’t seen since the early summer of 2013,” he says. Swan’s firm sifts through millions of social media posts each week with software that analyzes the way consumers are speaking about the brands and products made by publicly traded companies. “So that’s a very bullish sign for that company and a really cheap stock.”
Analysts see value. Because the boating industry has been beaten down the last six or seven years, “a lot of these (stocks) are good values,” Lupkas says, especially as people come back into the recreational boating industry due to low gas prices. “The smaller companies have been punished a little bit in this market environment,” he says. But in assessing MarineMax, he says, considering its business structure and industry, “it also has room to grow.”
Brunswick Corp. (BC), the maker of boats such as the Boston Whaler and the Sea Ray, is recommended by Jonathan Polson, portfolio manager and investment advisor of SouthernTrust Wealth Management LLC in Greenville, South Carolina.
“Anyone who’s going fishing is going to be on a Brunswick boat at some point this summer,” he says.
Business on the consumer side of the boating business is particularly strong. Eleven analysts have rated this stock a strong buy.
Theme parks, too. Meanwhile, theme parks and water parks such as those owned by Cedar Fair (FUN) and Walt Disney Co. (DIS) are seasonal stocks also recommended by Polson.
“The summer season is the time when families take off for the theme parks,” he says. “Disney is where everyone goes during the summer with their kids, and Cedar Fair, while not as diversified as Disney, has a decent 5.60 percent dividend yield.”
Cedar Fair owns and operates 11 amusement parks, one indoor and three outdoor water parks, and five hotels in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Missouri, Michigan, and Toronto, Ontario.
Other products. Edgewell Personal Care Co. (EPC), which makes shaving products and sunscreens such as Banana Boat and Hawaiian Tropic, was given a buy by analyst Sarah Donnelly of Gabelli & Co. in Rye, New York.
“For the year, sun care will have an easier comparison in 2016 following a difficult season last year,” she wrote in a February report. This month, Goldman Sachs upgraded Energizer Holdings to “buy” from “neutral” and set the price target at $49 per share.
[Read: Utilities See Growth Potential in Renewables.]
GoPro (GPRO) and Fitbit (FIT) are not sun or watersport products per se, but when it comes to summer activities and outdoor sports, Swan says he is seeing a big movement of consumers toward the technology wearables.
“It seems like people are really wanting to incorporate technology with the opportunities to re-live these experiences with going outside. I think it’s less about the surfboard that you buy and the apparel that you wear, and more about how you can incorporate it into your social technology network,” he says.
Swan also says GoPro and Fitbit have the three qualities he looks for when he recommends a buy: high consumer enthusiasm, purchase intent volume and high consumer sentiment.
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13 Ways to Invest in Summer originally appeared on usnews.com
