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In this article, we discuss 10 best leisure stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Leisure Stocks To Buy Now.
The leisure industry is evolving rapidly, and people now look forward to more than travel and staycations to spend their vacations or free time. Some of the trends shaping the leisure industry in 2022 include interactive educational activities, personalized experiences through mass customization, AI that supports contactless payments and social distancing, technological ecosystems, machine learning and data insights for improved experiences, and gamification, augmented reality, and immersive experiences. Some of the top leisure companies in the world are pioneers of the transformation in this industry.
Similarly, attitudes towards fitness and leisure across the world are shifting. The COVID-19 pandemic changed the fitness dynamic for a lot of people who never previously cared to exercise or venture out, and now they were going for daily walks and searching for different ways to get their fitness fix. This will significantly increase the demand for leisure and fitness centers in residential and commercial complexes.
Between 2018 and 2060, the ratio of the American population aged 65 and older will increase from 15% to 24%, reflecting a potential boost in the future demand for different types of entertainment, leisure, and personal development. Some of the best leisure stocks to buy now include The Walt Disney Company (NYSE:DIS), Pool Corporation (NASDAQ:POOL), and Planet Fitness, Inc. (NYSE:PLNT).
Our Methodology
We selected the following leisure stocks based on positive analyst coverage, strong business fundamentals, and future growth prospects. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
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Best Leisure Stocks To Buy Now
10. Life Time Group Holdings, Inc. (NYSE:LTH)
Number of Hedge Fund Holders: 6
Life Time Group Holdings, Inc. (NYSE:LTH) is a Minnesota-based company that provides health, fitness, and wellness experiences in the United States and Canada. It engages in designing, building, and operating sports and athletic, professional fitness, family recreation, and spa centers in a resort-like environment. On November 9, Life Time Group Holdings, Inc. (NYSE:LTH) reported a ??Q3 GAAP EPS of $0.12, beating market estimates by $0.22. For the fourth quarter of 2022, the company is projecting revenue to be in the range of $460 million to $490 million, versus a consensus of $479.69 million.
On November 10, Oppenheimer analyst Brian Nagel maintained an Outperform rating on Life Time Group Holdings, Inc. (NYSE:LTH) but trimmed the price target on the shares to $33 from $40 following the Q3 results. With membership and dues trends at the company now tracking well, the analyst believes Life Time Group Holdings, Inc. (NYSE:LTH) is positioned well to focus more on optimizing expenses to offer higher margin expansion and profitability over the rest of 2022 and into 2023.
According to Insider Monkey’s data, 6 hedge funds were bullish on Life Time Group Holdings, Inc. (NYSE:LTH) at the end of Q3 2022, compared to 3 funds in the prior quarter. Leonard Green’s Leonard Green & Partners is the largest stakeholder of the company, with 58.7 million shares worth $572.7 million.
Like The Walt Disney Company (NYSE:DIS), Pool Corporation (NASDAQ:POOL), and Planet Fitness, Inc. (NYSE:PLNT), Life Time Group Holdings, Inc. (NYSE:LTH) is one of the best leisure stocks to monitor.
9. Cedar Fair, L.P. (NYSE:FUN)
Number of Hedge Fund Holders: 10
Cedar Fair, L.P. (NYSE:FUN) is an Ohio-based company that owns and operates amusement and water parks, and complementary resort facilities in the United States and Canada. Cedar Fair, L.P. (NYSE:FUN) is one of the premier leisure stocks to invest in. Record-breaking pace through October supports expectations that Cedar Fair, L.P. (NYSE:FUN) will achieve new all-time highs for net revenues and adjusted EBITDA in 2022. The company posted a Q3 GAAP EPS of $5.86, beating Wall Street estimates by $2.00.
On November 2, Deutsche Bank analyst Chris Woronka maintained a Buy rating on Cedar Fair, L.P. (NYSE:FUN) but lowered the price target on the shares to $55 from $63. 2023 is most likely to represent "something of a normalization of park trends, not a new paradigm" in terms of maintaining or increasing per caps from historically resilient levels if attendance completely recovers to pre-COVID levels, the analyst told investors in a research note.
According to Insider Monkey’s data, 10 hedge funds were bullish on Cedar Fair, L.P. (NYSE:FUN) at the end of Q3 2022, compared to 12 funds in the prior quarter. Mark T. Gallogly’s Centerbridge Partners is the largest stakeholder of the company, with approximately 3 million shares worth $122 million.
Miller Value Partners released its Q1 2020 investor letter and mentioned Cedar Fair, L.P. (NYSE:FUN). Here is what the firm said:
“Theme park operator Cedar Fair (FUN) fell 66.15% during the period with travel and leisure stocks after President Trump restricted travel to the US and government agencies recommended the restriction of large crowds in response to COVID-19. That said, the company reported solid Q4 results with revenue of $257M and EBITDA of $54.6M, slightly below consensus of $267M and $64.7M, respectively, on one fewer week of operations Y/Y. On a same-week basis, revenue rose +13% Y/Y driven by a +16% increase in visits while out-of-park spend came in higher than expected at +9.1%. The long-term outlook remains intact with management noting early season sales are +40% (following the 50% increase in 3Q19). Management also introduced a new long-term EBITDA target of $600M by 2024 (3.5% compound annual growth rate (CAGR)). In addition, insiders including CEO Richard Zimmerman purchased over 50,000 shares totaling $1.97M.”
8. Manchester United plc (NYSE:MANU)
Number of Hedge Fund Holders: 14
Manchester United plc (NYSE:MANU) owns and operates a professional sports team in the United Kingdom. It operates Manchester United Football Club, a professional football team. Manchester United plc (NYSE:MANU) is one of the best leisure stocks to monitor. For the full year fiscal 2023, the company expects total revenues to be in a range of ￡580 million to ￡600 million and adjusted EBITDA to range from ￡100 million to ￡110 million.
On November 23, after Manchester United's owners announced that they are exploring strategic alternatives for the club, Jefferies analyst Randal Konik said he expects "a competitive process" and that he continues to believe that the club's fundamentals and "significant global reach" merit a premium. He has a Buy rating and a $17 price target on Manchester United plc (NYSE:MANU) shares.
According to Insider Monkey’s data, 14 hedge funds were bullish on Manchester United plc (NYSE:MANU) at the end of the third quarter of 2022, compared to 16 funds in the prior quarter. John W. Rogers’ Ariel Investments is the biggest stakeholder of the company, with 11.4 million shares worth $151.60 million.
Here is what East 72 Fund has to say about Manchester United plc (NYSE:MANU) in its Q3 2022 investor letter:
“So where does this leave the publicly traded MSGS? As we discuss with Manchester United (NYSE:MANU), whilst underpinned by positive economics, owning stock in the team is held back by a family controlled structure and past erratic attitudes towards the team(s). To some extent, the main (only?) investment thesis is a sale of the teams – a factor reflected in the share prices.
MSGS has only 24.77m shares issued trading at $136.66. As we discuss with MANU below, accounting in sports teams is arcane due to deferred revenues sat on the balance sheet often leading to upfront cash and hefty seasonality. Whilst MSGS net debt at $160million is low, on our estimates there is around $320m of negative working capital. Hence, the enterprise value for the two teams is around $3.8billion ($3.3bn equity + $480m “liabilities”). The combined Forbes valuations of the Knicks and Rangers is $7.8billion; if we take our liability figure off this, the debt free figure would be around $7.3billion. With “the Garden” separated, there may be a further discount, but the Forbes values lay 92% above the equity markets’ view. We have a small exposure, bought at very recent prices.”
7. Vista Outdoor Inc. (NYSE:VSTO)
Number of Hedge Fund Holders: 22
Vista Outdoor Inc. (NYSE:VSTO) is a Minnesota-based company that designs, manufactures, and markets consumer products in the outdoor sports and recreation markets in the United States and internationally. On November 2, Vista Outdoor Inc. (NYSE:VSTO) reported a FQ2 non-GAAP EPS of $1.71 and a revenue of $781.7 million, outperforming Wall Street estimates by $0.01 and $13.4 million, respectively.
On November 7, Lake Street analyst Mark Smith maintained a Buy rating on Vista Outdoor Inc. (NYSE:VSTO) but lowered the price target on the shares to $45 from $53 after the company reported "mixed" Q2 results and lowered full-year guidance to reflect the lower sales and profitability outlook. While the analyst was "disappointed" by these results, he thinks Vista Outdoor Inc. (NYSE:VSTO) has a "diverse portfolio" and is seeing "different results across different families of products".
According to Insider Monkey’s data, 22 hedge funds were long Vista Outdoor Inc. (NYSE:VSTO) at the end of September 2022, compared to 25 funds in the prior quarter. Jeffrey Gates’ Gates Capital Management is the largest stakeholder of the company, with 5.5 million shares worth $135.60 million.
Here is what ClearBridge Investments has to say about Vista Outdoor Inc. (NYSE:VSTO) in its Q2 2021 investor letter:
“Our Strategy outperformed with strong results from consumer discretionary stocks like Vista Outdoor. Vista Outdoor, a manufacturer of a wide range of products serving the outdoor sports and recreation markets, also performed well in the period on continued demand and growing margins.”
6. Topgolf Callaway Brands Corp. (NYSE:MODG)
Number of Hedge Fund Holders: 26
Topgolf Callaway Brands Corp. (NYSE:MODG) is a California-based company that designs, manufactures, and commercializes golf equipment, golf and lifestyle apparel, and other accessories. It operates through three segments – Topgolf, Golf Equipment, and Apparel, Gear and Other. Topgolf Callaway Brands Corp. (NYSE:MODG) is one of the best leisure stocks to invest in.
On November 3, Topgolf Callaway Brands Corp. (NYSE:MODG) reported a Q3 non-GAAP EPS of $0.23 and a revenue of $988.5 million, outperforming Wall Street estimates by $0.06 and $38.32 million, respectively. For full-year 2023, Topgolf Callaway Brands Corp. (NYSE:MODG) expects net revenues to grow approximately 10% year-over-year.
JPMorgan analyst Kevin Heenan on October 26 maintained an Overweight rating on Topgolf Callaway Brands Corp. (NYSE:MODG) but trimmed the price target on the shares to $29 from $30. The analyst established 2023 price targets across the leisure sector ahead of the Q3 results.
According to the third quarter database of Insider Monkey, 26 hedge funds were long Topgolf Callaway Brands Corp. (NYSE:MODG), compared to 29 funds in the last quarter. Ken Fisher’s Fisher Asset Management held the biggest stake in the company, comprising 3.15 million shares worth $60.7 million.
In addition to The Walt Disney Company (NYSE:DIS), Pool Corporation (NASDAQ:POOL), and Planet Fitness, Inc. (NYSE:PLNT), Topgolf Callaway Brands Corp. (NYSE:MODG) is one of the top leisure stocks backed by smart investors.
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Disclosure: None. 10 Best Leisure Stocks To Buy Now is originally published on Insider Monkey.
