Without a doubt, the vast majority of human beings get tired of their routines and crave exciting activities that enable them to escape monotony. As a result, consumers with disposable incomes spend a significant amount on adventures. With unemployment staying near record lows and average real incomes generally rising, many consumers have a great deal of disposable income. What’s more, travel trends have cooled off slightly but still remain strong, and consumers tend to go on adventures more when they travel to other places. After all, almost everyone wants to experience new, exotic adventures when they’re far away from home. Given all of these points, I think now is a great time to buy the top adventure stocks. Here are three names that definitely fit the bill.
Vail Resorts (MTN)
I’ve only skied a few times, but I know that speeding down hills on skis is indeed very exciting and adventurous. Vail Resorts (NYSE:MTN), which owns multiple ski resorts in the U.S., Europe and Australia, capitalizes on many consumers’ love of the thrills that the sport provides. Of course, the company is also benefiting from the strong U.S. economy, since skiing is not a cheap endeavor.
In September, the company reported that the “North American ski season pass sales increased approximately 7% in units and 11% in sales dollars.” The fact that the dollars spent on Vail’s North American season passes grew year-over-year (YoY) certainly bodes very well for the outlook of MTN stock over the next six months. That’s because the figure suggests significantly more consumers will visit the company’s North American resorts over the next several months than last year, causing its lodging and food revenue to also climb meaningfully on a YoY basis.
Also noteworthy is that, in September, investment bank Truist (NYSE:TFC) upgraded the shares to Buy from Hold, citing the stock’s “attractive” valuation and what it saw as the company’s “above inflationary pricing power.”
Analysts, on average, expect the company’s earnings per share to jump to $9.28 in 2024. Moreover, MTN is trading at a forward price-earnings ratio of 24, which is rather low, given its strong growth rates.
Brunswick Corporation (BC)
Riding on a boat during the summer with a cool breeze on your face while reveling in the natural beauty of the sun and water can certainly be a wonderful adventure. Brunswick (NYSE:BC) sells boats that enable consumers to frequently enjoy that scenario.
BC has been hurt by tough comparisons and high inventories due to the record sales it enjoyed during the pandemic. At that time, boating was one of the few away-from-home social activities people continued to enjoy.
Indeed, BC’s sales fell 6% last quarter versus the same period a year earlier, while its operating earnings sunk 17.5% YoY.
But indicating the firm could be ready to break out of its doldrums, its brand sales at an important boat show last month soared tremendously versus the previous year. For example, at the prominent boat show held in Fort Lauderdale, the unit sales of its Boston Whaler brand soared 38% YoY, while the unit sales of its Sea Ray boats jumped 26% over the same period.
Six Flags (SIX)
With its exciting roller coasters and other thrill-inducing rides, theme parks can be very adventurous. Indeed, one of Six Flags‘ (NYSE:SIX) amusement parks, located in suburban New Jersey, is called Great Adventure.
As I’ve pointed out in previous columns, I expect amusement parks that compete with Disney (NYSE:DIS) to meaningfully benefit from the steep price hikes and political controversies the latter conglomerate has undertaken.
That call has had mixed levels of accuracy over the roughly two years since I made it. But perhaps it’s starting to become more on target as SIX reported on Nov. 2 that its Q3 revenue had jumped 8% to $547 million versus the same period a year earlier while its attendance climbed 16% year-over-year to 9.3 million. Largely due to investments made by the company, its EBITDA and net income were relatively unchanged versus YoY.
On the other hand, the company’s cash from operations jumped to $162.6 million from $130.6 million during the same period a year earlier.
Moreover, investment bank Jefferies is upbeat about the company’s pending merger with another amusement park operator, Cedar Fair (NYSE:FUN). The bank expects the combined company to report EBITDA of $1.2 billion and benefit from $200 million in cost reductions.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
